When it comes to domestic leasehold property in Reading, you are actually purchasing an entitlement to reside in a property for a prescribed time frame. These days flat leases are usually granted for 99 years or 125. Many leasehold owners are unconcerned as this seems like a long period of time, you may consider extending the lease sooner as opposed to later. The general rule is that the shorter the number of years is the cost of extending the lease increases markedly notably once there are less than eighty years left. Leasehold owners in Reading with a lease approaching 81 years unexpired should seriously consider extending it sooner rather than later. Once a lease has under eighty years outstanding, under the relevant legislation the landlord is entitled to calculate and demand a greater premium, assessed on a technical multiplication, strangely termed as “marriage value” which is due.
Leasehold residencies in Reading with more than one hundred years remaining 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 premises. In such situations there is often little to be gained by purchasing the freehold unless savings on ground rent and estate 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Coventry Building Society | 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. |
| 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. |
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 conveyancer we work with provide it.
Twenty four months ago Mason, started to get close to the 80-year mark with the lease on his first floor flat in Reading. Having bought his home two decades ago, the length of the lease was of little interest. As luck would have it, he noticed he would soon be paying an escalated premium for a lease extension. Mason arranged for a lease extension just under the wire in March. Mason and the freeholder via the managing agents eventually agreed on the final figure of £5,500 . If the lease had slipped to less than eighty years, the premium would have gone up by at least £1,050.
Mr and Mrs. S François moved into a one bedroom flat in Reading in January 1995. We are asked if we could estimate the compensation to the landlord would be to prolong the lease by a further 90 years. Identical properties in Reading with 100 year plus lease were valued around £201,200. The mid-range amount of ground rent was £55 invoiced quarterly. The lease lapsed on 7 April 2081. Considering the 56 years as a residual term we calculated the premium to the freeholder to extend the lease to be between £31,400 and £36,200 exclusive of legals.
In 2014 we were contacted by Ms Zoe Cox who, having moved into a one bedroom flat in Reading in May 2003. We are asked if we could estimate the price could be for a 90 year lease extension. Identical flats in Reading with an extended lease were worth £300,000. The average amount of ground rent was £50 collected per annum. The lease ended on 28 March 2101. Considering the 76 years unexpired we estimated the premium to the freeholder to extend the lease to be between £8,600 and £9,800 plus costs.