The market value of a leasehold property in Poundbury is impacted by how many years the lease has remaining. If it is close to or less than eighty years you should anticipate difficulties on re-sale, so it is recommended to arrange for a lease extension ahead of buying. It is ideal to start the process of extending the lease is when a lease still has 82 years unexpired so that formalities can be addressed prior to the eighty year cut off point. Statute enables Poundbury qualifying lessees to a ninety year extension added to their residual lease term (ie if your lease has fifty years remaining the statutory lease extension will provide a new term of 140 years). The reason of the valuation is to determine the amount payable by the lessee to the freeholder for the purchase of the lease extension.
Leasehold premises in Poundbury with in excess of 100 years remaining on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such circumstances there is often little upside in purchasing the freehold unless savings on ground rent and maintenance charges merit it.
| Lender | Requirement |
|---|---|
| Chelsea Building Society | 85 years from the date of completion of the mortgage. Please ensure that you explain the implications of a short term lease to the borrower. |
| Coventry Building Society | 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 30 years plus the term of the mortgage at the outset of the mortgage. |
| Santander | If the property is leasehold, the remaining unexpired lease term at the end of the new mortgage term must be at least 50 years where any part of the mortgage is on Interest Only and 30 years if all loan parts are on Capital Repayment and Interest. You must report the unexpired lease term to us and await our instructions if:
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Irrespective of whether you are a tenant or a freeholder in Poundbury,the lease extension lawyers that we work with will always be prepared to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Poundbury valuers.
Subsequent to protracted negotiations with the freeholder of her garden apartment in Poundbury, Nicole started the lease extension process as the 80 year mark was rapidly nearing. The lease extension completed in June 2013. The freeholder’s fees were restricted to below 700 pounds.
In 2009 we were approached by Mr and Mrs. F Harris who, having owned a purpose-built apartment in Poundbury in May 2010. The dilemma was if we could estimate the compensation to the landlord could be for a ninety year lease extension. Identical residencies in Poundbury with a long lease were worth £210,000. The mid-range ground rent payable was £50 collected annually. The lease lapsed in 2106. Given that there were 80 years remaining we approximated the premium to the landlord to extend the lease to be between £8,600 and £9,800 plus legals.
Last Autumn we were phoned by Mrs H Smith , who owned a one bedroom flat in Poundbury in March 2012. The question was if we could approximate the premium would be to extend the lease by an additional years. Comparable homes in Poundbury with an extended lease were in the region of £280,000. The average ground rent payable was £45 billed annually. The lease came to a finish on 22 October 2095. Considering the 69 years as a residual term we calculated the premium to the landlord for the lease extension to be between £12,400 and £14,200 plus legals.