The value of Reading leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The expense of extending the lease can escalate substantially once the remaining term is less than 80 years
Leasehold properties in Reading with more than 100 years unexpired on the lease are sometimes 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 buying the freehold unless savings on ground rent and service charges warrant it.
| 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; |
| 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Retaining our service gives you increased control over the value of your Reading leasehold, as your property will be more valuable and saleable in respect of lease length should you want to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Last year Teddy, started to get close to the eighty-year mark with the lease on his one bedroom apartment in Reading. In buying his property 19 years previously, the unexpired term was of minimal interest. Fortunately, he recognised he needed to take steps soon on Extending the lease. Teddy was able to extend his lease just ahead of time in January. Teddy and the landlord who owned the flat above subsequently agreed on a premium of £5,500 . If the lease had descended lower than 80 years, the amount would have increased by at least £1,100.
Last year we were approach by Dr Gabriel Mercier , who purchased a basement apartment in Reading in July 2002. We are asked if we could approximate the price could be to extend the lease by 90 years. Comparative homes in Reading with 100 year plus lease were in the region of £184,000. The mid-range amount of ground rent was £55 billed monthly. The lease came to a finish in 2078. Taking into account 53 years outstanding we estimated the premium to the landlord for the lease extension to be between £28,500 and £33,000 not including expenses.
In 2012 we were phoned by Mr E Ramírez who, having owned a garden flat in Reading in May 2004. We are asked if we could shed any light on how much (roughly) premium would likely be to extend the lease by ninety years. Identical residencies in Reading with an extended lease were valued around £290,000. The mid-range ground rent payable was £45 collected every twelve months. The lease ended on 5 September 2098. Considering the 73 years left we calculated the premium to the landlord to extend the lease to be between £9,500 and £11,000 exclusive of fees.