Poundbury leases on residential deteriorating in value. if your lease has about 90 years left, you should start thinking about a lease extension. An important point to note is that it is desirable for a lease extension to take place before the term of the current lease falls below eighty years - otherwise a higher premium will be due. Leasehold owners in Poundbury will usually be legally entitled to a lease extension; however It would be wise to check with a lawyer to confirm your eligibility. In some circumstances you may not qualify. There are prescribed deadlines and steps to follow once the process is triggered so it’s best to be guided by a lawyer during the process.
Leasehold properties in Poundbury with more than 100 years left on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such situations there is often little upside in purchasing the reversionary interest unless savings on ground rent and estate charges merit it.
| Leases with less than 70 years at the commencement of the mortgage should be declined (see exception below).
Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office.
Leases with fewer than 70 years should only be referred to the issuing office where the following scenario applies, as discretion may be applied subject to bank approval:
• Property is located in any of the following prestigious developments: Cadogan, Crown, Grosvenor, Howard de Walden, Portman or Wellcome Trust Estates in Central London AND
• The value of the property subject to the short remaining term is £500,000 or more AND
• The loan to value does not exceed 90% for purchases, 90% like for like re-mortgages, 80% for re-mortgages with any element of capital raising and 80% for existing Barclays mortgage borrowers applying for additional borrowing;
|A minimum of 70 years unexpired lease at completion for all scheme types apart from Lifetime Mortgages (Equity Release), which require a minimum unexpired term of 80 years at completion.
|Minimum 70 years from the date of the mortgage.
|Leeds Building Society
|85 years remaining from the start of the mortgage.
|Royal Bank of Scotland
|Mortgage term plus 30 years.
Engaging our service gives you enhanced control over the value of your Poundbury leasehold, as your property will be more valuable and saleable in terms of lease length should you wish to sell. The conveyancing solicitors that we work with have a in-depth market knowledge handling many hundreds of lease extensions or freehold purchase transactions.
Finley owned a conversion apartment in Poundbury being marketed with a lease of a few days over sixty years outstanding. Finley informally contacted his freeholder a well known Bristol-based freehold company and enquired on a premium to extend the lease. The freeholder indicated a willingness to grant an extension taking the lease to 125 years subject to an increased rent to £200 annually. Ordinarily, ground rent would not be payable on a lease extension were Finley to exercise his statutory right. Finley procured expert legal guidance and was able to make an informed judgement and handle with the matter and ending up with a market value flat.
In 2010 we were called by Mr Eli Flores who, having acquired a studio apartment in Poundbury in January 2009. The dilemma was if we could shed any light on how much (roughly) compensation to the landlord would likely be for a ninety year extension to my lease. Similar residencies in Poundbury with an extended lease were in the region of £285,000. The mid-range amount of ground rent was £45 billed per annum. The lease expired on 21 January 2096. Given that there were 72 years unexpired we approximated the compensation to the landlord to extend the lease to be within £12,400 and £14,200 plus costs.
In 2013 we were phoned by Dr Megan Stewart who, having acquired a one bedroom flat in Poundbury in July 1996. We are asked if we could shed any light on how much (approximately) premium could be to extend the lease by an additional years. Comparative residencies in Poundbury with an extended lease were worth £233,200. The average amount of ground rent was £60 collected per annum. The lease came to a finish in 2085. Taking into account 61 years remaining we calculated the compensation to the freeholder for the lease extension to be between £22,800 and £26,400 exclusive of professional charges.