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Why you should commence your Redland lease extension


Main reasons to start your Redland lease extension today:

Increase your lease and increase your Redland property value

Redland leases on residential deteriorating in value. if your lease has approximately ninety years left, you should start thinking about a lease extension. If lease term is less than 80 years, you will then have to pay 50% of the property's 'marriage value' on top of the standard cost of the lease extension to the landlord. Marriage value is the amount of extra value that a lease extension will add to the property. Flat owners in Redland will mostly qualify for a lease extension; however a solicitor should be able confirm your eligibility. In certain situations you may not qualify. There are prescribed deadlines and formalities to follow once the process has started so it’s prudent to be guided by a conveyancing solicitor during the process.

Redland property with a lease extension is almost the same value as a freehold

It is generally accepted that a property with over one hundred years remaining is worth approximately the equivalent as a freehold. Where an further ninety years added to any lease with more than 35 years unexpired, the residence will be worth the same as a freehold for decades to come.

Lending institutions will not lend with a short lease

The definition of a short lease varies by mortgage company, yet mortgage lenders start to become concerned at around 75 years. This will cause difficulties when you need to sell or refinance your property as it will be practically unmortgageable. Even though you may not have an immediate plan to sell but when you do your buyer must wait 2 years before they can exercise the right to a an extension to the lease.

Lender Requirement
Accord Mortgages 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.
Barnsley Building Society 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term.
Leeds Building Society 85 years remaining from the start of the mortgage.
The Mortgage Works Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:

Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer

New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer

Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.

SECOND HAND PROPERTIES

Unacceptable - advise Issuing Office (Will be declined):
- Unexpired lease term less than 70 years
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period less than or equal to 5 years

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than 85 years
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI

NEW BUILD PROPERTIES (includes office conversions)

Unacceptable - advise Issuing Office (will be declined):
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house
- Any lease which is subject to a ground rent (or annual rent) being charged which is more than on a peppercorn basis
- Any lease which is subject to a ground rent (or annual rent) being reviewed and altered on any review basis or methodology

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- A lease subject to a peppercorn ground rent (annual rent) charges

For the avoidance of doubt, any new build properties completed but not sold pre 30 June 2022 will only be acceptable if the lease conforms to the above guidance

* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years

LEASE EXTENSIONS

We require all lease extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where you become aware that it does not meet these requirements, please refer to the Issuing Office
Virgin 85 years at the time of completion. If it's less, we require it to be extended on or before completion.

Get in touch with one of our Redland lease extension solicitors or enfranchisement solicitors

Regardless of whether you are a tenant or a freeholder in Redland,the lease extension experts that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Redland valuers.

Redland Lease Extension Case Summaries:

Oliver, Redland, Bristol,

Oliver owned a studio flat in Redland being marketed with a lease of a few days over 59 years unexpired. Oliver on an informal basis approached his freeholder a well known Manchester-based freehold company and enquired on a premium to extend the lease. The landlord was prepared to grant an extension on non-statutory terms taking the lease to 125 years on the basis of an increased rent to £100 annually. No ground rent would be payable on a lease extension were Oliver to invoke his statutory right. Oliver procured expert advice and was able to make a more informed decision and handle with the matter and ending up with a market value flat.

Redland case:

Ms Amelia Thompson owned a studio flat in Redland in September 2008. The dilemma was if we could shed any light on how much (roughly) compensation to the landlord would be for a ninety year lease extension. Identical premises in Redland with an extended lease were in the region of £275,000. The mid-range amount of ground rent was £55 invoiced every twelve months. The lease elapsed on 8 July 2101. Given that there were 77 years as a residual term we estimated the compensation to the landlord to extend the lease to be within £13,300 and £15,400 exclusive of legals.

Redland case:

Dr T Cooper completed a one bedroom apartment in Redland in September 1996. The dilemma was if we could approximate the premium would be to prolong the lease by a further 90 years. Comparable properties in Redland with 100 year plus lease were valued around £183,600. The mid-range amount of ground rent was £65 billed monthly. The lease end date was on 12 June 2081. Having 57 years outstanding we estimated the premium to the freeholder to extend the lease to be between £28,500 and £33,000 not including expenses.