Unfortunately that a Reading residential lease is a wasting asset. As the lease term diminishes so does the value of the property. The extent of this is not fully appreciated in the first few years due to the deflation being disguised by increases in the Reading property prices.Once your lease nears 85ish years, you should start thinking about a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease falls lower than 80 years - otherwise a higher amount will be due. The majority of flat owners in Reading will be able to extend under the legislation; however a lawyer should be able to confirm whether you are eligibility. In some cases you may not qualify. There are also strict timeframes and procedures to follow once the process is initiated and you will need to be guided by your conveyancer from beginning to end of the formalities.
Leasehold properties in Reading with more than one hundred years left on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your home. In such circumstances there is often little to be gained by purchasing the freehold unless savings on ground rent and maintenance charges merit it.
| Lender | Requirement |
|---|---|
| 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; |
| Godiva Mortgages | A minimum of 70 years unexpired lease at completion for all scheme types apart from Lifetime Mortgages (Equity Release), which require a minimum unexpired term of 80 years at completion. |
| 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 |
| 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. |
The conveyancers that we work with procure 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 conveyancing solicitor we work with provide it.
Jamie was the the leasehold proprietor of a high value apartment in Reading on the market with a lease of a little over 61 years remaining. Jamie on an informal basis approached his freeholder a well known London-based freehold company for a lease extension. The landlord indicated a willingness to grant an extension taking the lease to 125 years subject to a new rent initially set at £150 per annum and doubled every twenty five years thereafter. Ordinarily, ground rent would not be due on a lease extension were Jamie to invoke his statutory right. Jamie procured expert legal guidance and was able to make an informed decision and deal with the matter and ending up with a market value flat.
Mr Ibrahim Vincent bought a purpose-built flat in Reading in March 1999. We are asked if we could shed any light on how much (roughly) price would be to extend the lease by ninety years. Identical properties in Reading with a long lease were worth £280,000. The average amount of ground rent was £45 collected per annum. The lease lapsed in 2096. Given that there were 70 years unexpired we calculated the premium to the freeholder to extend the lease to be within £12,400 and £14,200 not including expenses.
In 2009 we were contacted by Dr Arthur García who, having bought a ground floor apartment in Reading in June 1996. We are asked if we could shed any light on how much (approximately) compensation to the landlord could be to prolong the lease by a further 90 years. Comparable properties in Reading with a long lease were worth £223,400. The mid-range amount of ground rent was £60 collected monthly. The lease ended on 8 June 2085. Taking into account 59 years left we approximated the premium to the freeholder to extend the lease to be within £27,600 and £31,800 plus fees.