Preston 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 Preston tenants have the right to extend their lease by an additional 90 years under the 1993 Leasehold Reform Act. Where you are a leasehold owner in Preston you would be well advised to check if your lease has between 70 and ninety years remaining. There are compelling reasons why a Preston leaseholder with a lease having around 80 years left should take steps to ensure that a lease extension is effected without delay
It is conventional wisdom that a property with in excess of 100 years remaining is worth roughly the same as a freehold. Where an additional 90 years added to all but the shortest lease, the property will be equivalent in value to a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Barclays plc | 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The conveyancers that we work with handle Preston lease extensions and help protect your position. A lease extension can be arranged to be completed to coincide with a change of ownership so the costs of the lease extension are paid for using part of the sale proceeds. You really do need expert legal advice in this difficult and technical area of law. The lawyer we work with provide it.
Half a year ago William, started to get near to the eighty-year threshold with the lease on his purpose- built flat in Preston. Having bought his property two decades ago, the unexpired term was of no significance. As luck would have it, it dawned on him that he needed to take steps soon on Extending the lease. William arranged for a lease extension just in the nick of time in January. William and the freeholder via the managing agents eventually settled on the final figure of £5,500 . If he failed to meet the deadline, the premium would have escalated by at least £950.
In 2013 we were e-mailed by Dr J Bailey who, having acquired a purpose-built flat in Preston in August 2005. The question was if we could approximate the price could be to prolong the lease by 90 years. Comparable residencies in Preston with 100 year plus lease were valued around £200,800. The mid-range amount of ground rent was £65 collected annually. The lease came to a finish on 20 July 2085. Given that there were 60 years as a residual term we approximated the premium to the freeholder to extend the lease to be within £20,900 and £24,200 exclusive of fees.
An example of a Lease Extension matter before the tribunal for a Preston premises is Ground Floor Flat 79 London Road in September 2012. the Tribunal held that the premium payable for the lease extension should be £7,636 This case was in relation to 1 flat. The unexpired term was 74 years.