Unfortunately that a Rainhill residential lease is a wasting asset. As the lease term reduces so does the value of the property. The extent of this is not fully appreciated in the early years due to the depreciation being disguised by increases in the Rainhill property prices.Where your lease has approximately ninety years left, you need to start considering a lease extension. If lease term dips under 80 years, you will end up paying half of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of extra value that a lease extension will add the property The majority of flat owners in Rainhill will be able to extend under the legislation; however a conveyancing solicitor should be able to clarify whether you are eligibility. In some cases you may not qualify. There are also strict timeframes and procedures to be adhered to once the process has commenced and you will need to be guided by your conveyancing solicitor throughout the formalities.
It is generally considered that a residential leasehold with over 100 years remaining is worth approximately the same as a freehold. Where an further 90 years added to all but the shortest lease, the residence will be equivalent in value to a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| 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; |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| 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. |
Regardless of whether you are a tenant or a landlord in Rainhill,the lease extension solicitors that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Rainhill valuers.
Last October Liam, started to get close to the 80-year threshold with the lease on his two bedroom flat in Rainhill. In buying his property 19 years ago, the unexpired term was of little interest. As luck would have it, it dawned on him that he would soon be paying way over the odds for Extending the lease. Liam was able to extend his lease just under the wire in August. Liam and the freeholder subsequently agreed on the final figure of £5,000 . If the lease had slid lower than 80 years, the sum would have become more exhorbitant by a minimum £925.
In 2009 we were e-mailed by Mr and Mrs. P Kelly who, having acquired a purpose-built flat in Rainhill in May 2007. The dilemma was if we could approximate the compensation to the landlord could be for a ninety year lease extension. Similar premises in Rainhill with 100 year plus lease were in the region of £280,000. The mid-range amount of ground rent was £55 collected annually. The lease ended in 2103. Given that there were 77 years left we approximated the compensation to the landlord to extend the lease to be within £13,300 and £15,400 not including fees.
Mr Oscar Lambert acquired a garden flat in Rainhill in September 2006. We are asked if we could estimate the price would be to prolong the lease by ninety years. Similar flats in Rainhill with 100 year plus lease were valued about £183,600. The average amount of ground rent was £65 collected monthly. The lease ended on 4 November 2083. Considering the 57 years left we estimated the compensation to the landlord for the lease extension to be within £28,500 and £33,000 not including professional charges.