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Why you should commence your Ramsbottom lease extension


Main reasons to start your Ramsbottom lease extension today:

A Ramsbottom leasehold property depreciates with the years remaining on the lease.

When it comes to residential leasehold premises in Ramsbottom, you are in fact renting it for a certain period of time. In recent years flat leases are usually granted for 99 years or 125. Many leasehold owners are unconcerned as this seems like a long period of time, you should think about extending the lease sooner rather than later. The general rule is that the shorter the number of years is the cost of extending the lease gets disproportionately more expensive notably when there are less than 80 years remaining. Residents in Ramsbottom with a lease approaching 81 years remaining should seriously think of extending it as soon as possible. Once a lease has fewer than 80 years outstanding, under the current statute the landlord is entitled to calculate and demand a larger premium, based on a technical calculation, known as “marriage value” which is due.

Ramsbottom property with a lease extension is almost the same value as a freehold

Leasehold residencies in Ramsbottom with over one hundred 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 justify it.

Banks and Building Societies may not issue a mortgage on a short lease

Mortgage companies are making their criteria more stringent and many now want flats to have at least 60 if not 70 years left at the end of the mortgage. Considering a number of flats in Ramsbottom were created in the 1950s, 1960s and 1970s as a result many now need to be extended if they wish to get a mortgage.

Lender Requirement
Birmingham Midshires Minimum 70 years from the date of the mortgage.
Santander You must report the unexpired lease term to us and await our instructions if:
1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or
2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or
3. no valuation report is provided
However, we will not accept a lease where on expiry of the mortgage:
(i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or
(ii) less than 30 years remain and the loan is repaid on a capital and interest basis

We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder.
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
TSB Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption.
The Mortgage Works Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:

Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer

New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer

Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.

SECOND HAND PROPERTIES

Unacceptable - advise Originations (Will be declined):
- Unexpired lease term less than 70 years
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period less than or equal to 5 years

Refer to Originations (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 0.5% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Originations):
- Unexpired lease term greater than 85 years
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI

NEW BUILD PROPERTIES (includes office conversions)

Unacceptable - advise Originations (Will be declined):
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house
- Starting Ground Rent greater than 0.1% of the property value
- Ground Rent review period less than or equal to 5 years
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI

Refer to Originations (Valuer will consider any impact on valuation figure and marketability):
- Ground Rent is linked to any indices greater than RPI
- Ground Rent is linked to the value of the building*
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 0.5% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Originations):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- Starting Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than 5 years
- Ground Rent escalation less than or equal to RPI

* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years

What makes us experts in Ramsbottom lease extensions?

The conveyancing solicitors that we work with procure Ramsbottom 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.

Ramsbottom Lease Extension Case Summaries:

Poppy, Ramsbottom, Greater Manchester,

After unsuccessful discussions with the freeholder of her one bedroom apartment in Ramsbottom, Poppy commenced the lease extension process as the eighty year threshold was swiftly coming. The transaction was concluded in March 2010. The landlord’s fees were restricted to under 500 GBP.

Ramsbottom case:

Mr Jude Wood took over the lease of a ground floor apartment in Ramsbottom in November 2004. The question was if we could shed any light on how much (approximately) price could be to extend the lease by an additional years. Comparable homes in Ramsbottom with 100 year plus lease were worth £205,000. The mid-range amount of ground rent was £50 billed annually. The lease came to a finish in 2100. Considering the 79 years as a residual term we calculated the compensation to the landlord to extend the lease to be between £8,600 and £9,800 exclusive of fees.

Ramsbottom case:

Last Christmas we were called by Mr R Bennett , who completed a first floor flat in Ramsbottom in May 2000. We are asked if we could estimate the price could be to prolong the lease by ninety years. Similar residencies in Ramsbottom with 100 year plus lease were in the region of £275,000. The average amount of ground rent was £65 billed annually. The lease expiry date was on 20 January 2089. Considering the 68 years left we approximated the premium to the landlord for the lease extension to be within £12,400 and £14,200 plus costs.