Prestbury leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of the lease becomes more expensive. It is the case that most Prestbury tenants have the right to extend their lease by an additional 90 years by virtue of the 1993 Leasehold Reform Act. If you are a leasehold owner in Prestbury you really ought to check if your lease has between 70 and 90 years remaining. In particular once the remaining lease term slips under eighty years, the compensation to the landlord for any lease extension sharply increases as part of the premium you pay is what is known as a marriage value
Leasehold residencies in Prestbury with over 100 years left on the lease are often referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such situations there is often little to be gained by buying the freehold unless savings on ground rent and estate charges justify it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 75 years plus the term of the mortgage at the outset of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
Retaining our service gives you better control over the value of your Prestbury leasehold, as your property will be more valuable and saleable in respect of lease length should you decide to sell. The conveyancing solicitors that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Omar was the the leasehold proprietor of a 2 bedroom apartment in Prestbury being sold with a lease of a little over 59 years outstanding. Omar informally contacted his landlord being a well known London-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 a new rent initially set at £100 per annum and increase every 25 years thereafter. No ground rent would be payable on a lease extension were Omar to exercise his statutory right. Omar procured expert advice and was able to make an informed decision and handle with the matter and sell the flat.
Mrs D Bennett took over the lease of a basement apartment in Prestbury in April 2004. We are asked if we could estimate the price could be to extend the lease by a further 90 years. Identical premises in Prestbury with an extended lease were worth £280,000. The mid-range ground rent payable was £55 collected annually. The lease expiry date was on 3 March 2104. Taking into account 78 years outstanding we approximated the premium to the landlord to extend the lease to be within £13,300 and £15,400 plus costs.
Last month we were phoned by Dr U Martin , who bought a ground floor flat in Prestbury in June 1995. The question was if we could approximate the premium could be to prolong the lease by a further 90 years. Identical premises in Prestbury with a long lease were in the region of £191,000. The average amount of ground rent was £65 invoiced yearly. The lease concluded in 2084. Having 58 years left we calculated the premium to the freeholder to extend the lease to be within £23,800 and £27,400 exclusive of fees.