Unfortunately that a Raunds residential lease is a wasting asset. The lease value drops in proportion to its lease length. The extent of this is taken for granted in the early years due to the loss of value being disguised by increases in the Raunds property market.Where your lease has approximately ninety years left, you need to start considering a lease extension. If lease term falls below 80 years, you will then be required to pay 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 additional value that a lease extension will add the property Most flat owners in Raunds will be able to extend under the legislation; however a conveyancer will be able to clarify if you qualify for an extension. In some situations you may not qualify. There are also strict timetables and procedures to be adhered to once the process is initiated and you will need to be guided by your lawyer from beginning to end of the process.
It is generally accepted that a residential leasehold with over one hundred years remaining is worth roughly the equivalent as a freehold. Where an further ninety years added to all but the shortest lease, the premises will be worth the same as 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; |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
| 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 Raunds,the lease extension solicitors that we work with will always be prepared to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Raunds valuers.
Two years ago Finley, started to get near to the eighty-year threshold with the lease on his purpose- built flat in Raunds. Having bought his flat twenty years previously, the lease term was of minimal concern. Thankfully, he noticed he would imminently be paying way over the odds for a lease extension. Finley arranged for a lease extension just in the nick of time in March. Finley and the freeholder via the management company subsequently settled on a premium of £5,500 . If he had missed the deadline, the price would have increased by at least £925.
Last March we were contacted by Mr and Mrs. H Baker , who bought a garden flat in Raunds in March 2006. We are asked if we could approximate the premium could be for a ninety year lease extension. Identical premises in Raunds with an extended lease were in the region of £174,200. The average amount of ground rent was £55 invoiced monthly. The lease came to a finish on 22 August 2076. Given that there were 51 years left we approximated the compensation to the freeholder for the lease extension to be between £31,400 and £36,200 not including costs.
Mr and Mrs. M Garcia completed a newly refurbished flat in Raunds in July 1995. We are asked if we could estimate the price would be for a 90 year lease extension. Identical homes in Raunds with 100 year plus lease were valued around £285,000. The average ground rent payable was £45 invoiced quarterly. The lease came to a finish on 24 March 2096. Taking into account 71 years outstanding we estimated the premium to the landlord to extend the lease to be between £12,400 and £14,200 exclusive of professional charges.