With a residential leasehold premises in Reading, you are actually buying a right to reside in a property for a prescribed time frame. In recent years flat leases are usually granted for 99 years or 125. Even though this may appear like a lengthy period of time, you should think about a lease extension sooner as opposed to later. The general rule is that the shorter the number of years is the cost of extending the lease gets disproportionately more expensive especially once there are less than 80 years remaining. Anyone in Reading with a lease approaching 81 years remaining should seriously consider extending it sooner than later. Once the lease term has less than eighty years outstanding, under the relevant legislation the landlord is entitled to calculate and charge a larger premium, based on a technical calculation, strangely termed as “marriage value” which is payable.
It is generally considered that a residential leasehold with over one hundred years unexpired lease term is worth roughly the equivalent as a freehold. Where an additional 90 years added to any lease with more than 45 years remaining, the premises will be equivalent in value to a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| 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 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; |
| 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. |
| 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 |
The conveyancers that we work with handle Reading 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.
Andrew owned a conversion flat in Reading being sold with a lease of just over 61 years left. Andrew on an informal basis approached his landlord a well known Manchester-based freehold company and enquired on a premium to extend the lease. The landlord indicated a willingness to grant an extension taking the lease to 125 years on the basis of an increased rent to £100 per annum. No ground rent would be payable on a lease extension were Andrew to exercise his statutory right. Andrew procured expert advice and was able to make an informed decision and deal with the matter and sell the flat.
Dr E White completed a purpose-built flat in Reading in January 2011. We are asked if we could estimate the compensation to the landlord would be for a ninety year lease extension. Similar properties in Reading with a long lease were worth £200,000. The average ground rent payable was £50 invoiced per annum. The lease came to a finish in 2103. Having 77 years outstanding we estimated the compensation to the freeholder to extend the lease to be within £8,600 and £9,800 not including legals.
In 2012 we were phoned by Dr C Reed who, having completed a one bedroom flat in Reading in February 2000. We are asked if we could shed any light on how much (roughly) premium would likely be for a ninety year extension to my lease. Similar homes in Reading with 100 year plus lease were valued about £260,200. The average ground rent payable was £65 collected quarterly. The lease finished in 2092. Taking into account 66 years remaining we estimated the premium to the landlord for the lease extension to be within £16,200 and £18,600 not including expenses.