It’s a harsh truth that a Redland residential lease is a deteriorating asset. The lease value reduces in proportion to its lease length. The extent of this is not fully appreciated in the early years due to the depreciation being disguised by increases in the Redland property market.Once your lease gets to 85ish years, you need to start thinking about a lease extension. If the number of years remaining slips below 80 years, you will end up paying 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of extra value that a lease extension will add the property Most flat owners in Redland 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 be entitled. There are also strict timetables and procedures to follow once the process is initiated and you will need to be guided by your lawyer for the duration of the formalities.
It is conventional wisdom that a property with more than one hundred years unexpired lease term is worth roughly the same as a freehold. Where an further ninety years added to any lease with more than 30 years unexpired, the residence will be equivalent in value to a freehold for decades to come.
| 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. |
| 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. |
Retaining our service gives you increased control over the value of your Redland leasehold, as your property will be more valuable and saleable in terms of lease length should you wish to sell. The conveyancing solicitors that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Harvey was the the leasehold owner of a conversion apartment in Redland on the market with a lease of a little over 61 years left. Harvey informally spoke with his landlord a well known London-based freehold company for a lease extension. The freeholder indicated a willingness to extend the lease to 125 years on the basis of a new rent to start with set at £100 per annum and doubled every 25 years thereafter. No ground rent would be payable on a lease extension were Harvey to invoke his statutory right. Harvey obtained expert advice and was able to make a more informed judgement and handle with the matter and ending up with a market value flat.
Ms Nicole Ward was assigned a lease of a recently refurbished apartment in Redland in July 1995. We are asked if we could approximate the price could be to prolong the lease by a further 90 years. Identical properties in Redland with 100 year plus lease were valued around £218,000. The average amount of ground rent was £45 collected every twelve months. The lease terminated on 18 April 2088. Taking into account 63 years as a residual term we approximated the premium to the landlord to extend the lease to be between £17,100 and £19,800 plus fees.
Mr P Watson purchased a purpose-built apartment in Redland in June 2003. The question was if we could approximate the premium could be to prolong the lease by an additional years. Comparative residencies in Redland with 100 year plus lease were worth £265,000. The mid-range ground rent payable was £50 invoiced quarterly. The lease expired on 6 November 2099. Given that there were 74 years left we approximated the compensation to the landlord to extend the lease to be between £9,500 and £11,000 plus professional charges.