The market value of a leasehold property in Prudhoe depends on how many years the lease has left to run. If it is close to or fewer than eighty years you should envisage problems on re-sale, so it is recommended to arrange for a lease extension prior to buying. It is ideal to start the process of extending the lease is when the lease still has 82 years unexpired so that formalities can be concluded prior to the 80 year threshold. Leasehold Reform legislation entitles Prudhoe qualifying lessees to acquire a new lease which will be for the balance of the existing lease plus a further term of 90 years. The intention of the valuation is to arrive at an opinion of the sum payable by the lessee to the freeholder for the acquisition of the lease extension.
Leasehold properties in Prudhoe with more than 100 years remaining 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 reversionary interest unless savings on ground rent and estate charges merit it.
| 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| Yorkshire 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. |
Engaging our service will provide you enhanced control over the value of your Prudhoe leasehold, as your property will be more valuable and saleable in respect of lease length should you want to sell. The conveyancers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Following protracted correspondence with the freeholder of her garden flat in Prudhoe, Alisha commenced the lease extension process just as the lease was approaching the all-important eighty-year threshold. The legal work completed in June 2011. The freeholder’s fees were negotiated to about 500 pounds.
Last Summer we were called by Dr Leo Jackson , who bought a garden apartment in Prudhoe in July 2008. The question was if we could approximate the price would likely be to prolong the lease by ninety years. Identical premises in Prudhoe with 100 year plus lease were worth £186,000. The mid-range ground rent payable was £65 billed monthly. The lease elapsed in 2083. Having 58 years outstanding we approximated the compensation to the landlord for the lease extension to be between £24,700 and £28,600 not including fees.
Dr Rory Hall bought a studio apartment in Prudhoe in May 2000. We are asked if we could shed any light on how much (roughly) premium would be for a ninety year extension to my lease. Similar flats in Prudhoe with an extended lease were in the region of £250,000. The average ground rent payable was £50 collected per annum. The lease ended in 2094. Given that there were 69 years left we calculated the premium to the landlord to extend the lease to be between £9,500 and £11,000 exclusive of fees.