For anyone whose Rawcliffe home is held on a long lease, the message is clear – if nothing is done, the property will eventually revert to the freeholder, leaving you empty-handed. The shorter the lease the less it is worth and the more expensive it will be to extend the lease.
Leasehold properties in Rawcliffe with over 100 years remaining on the lease are often regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such situations there is often little to be gained by purchasing the freehold unless savings on ground rent and estate charges merit it.
| 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. |
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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; |
| 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 conveyancing solicitors that we work with handle Rawcliffe 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 conveyancing solicitor we work with provide it.
During the course of the last few months Dexter, started to get close to the eighty-year mark with the lease on his first floor flat in Rawcliffe. In buying his home 18 years ago, the unexpired term was of no significance. by good luck, he recognised he needed to take action soon on a lease extension. Dexter was able to extend his lease at the eleventh hour in September. Dexter and the freeholder eventually agreed on a premium of £6,000 . If he not met the deadline, the price would have become more costly by at least £1,125.
In 2013 we were phoned by Mr S Simon who, having was assigned a lease of a purpose-built apartment in Rawcliffe in July 1998. The dilemma was if we could shed any light on how much (roughly) premium would be for a 90 year extension to my lease. Comparable flats in Rawcliffe with 100 year plus lease were in the region of £295,000. The mid-range ground rent payable was £45 invoiced per annum. The lease expiry date was on 25 April 2100. Having 74 years outstanding we approximated the compensation to the freeholder for the lease extension to be between £9,500 and £11,000 exclusive of professional charges.
In 2013 we were contacted by Dr Alex Morgan who, having purchased a recently refurbished apartment in Rawcliffe in October 2005. We are asked if we could estimate the compensation to the landlord would likely be to extend the lease by a further 90 years. Comparable flats in Rawcliffe with 100 year plus lease were worth £243,000. The mid-range amount of ground rent was £65 invoiced per annum. The lease end date was on 19 March 2089. Taking into account 63 years outstanding we calculated the compensation to the freeholder for the lease extension to be between £20,000 and £23,000 exclusive of expenses.