It’s a harsh truth that a Rotherham residential lease is a deteriorating asset. As the lease term diminishes so does the value of the property. The extent of this is taken for granted in the early years due to the reduction being disguised by increases in the Rotherham property prices.Where your lease has approximately 90 years left, you should start considering a lease extension. If the number of years remaining dips under eighty years, you will then be required to pay 50% of the property's 'marriage value' on top of the usual cost of the lease extension to the landlord. Marriage value is the amount of additional value that a lease extension will add the property Most flat owners in Rotherham will be able to extend under the legislation; however a conveyancing solicitor will be able to clarify if you qualify for an extension. In some cases you may not be entitled. There are also strict timeframes and procedures to follow once the process is instigated and you will need to be guided by your lawyer for the duration of the formalities.
Leasehold premises in Rotherham with in excess of 100 years outstanding on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such circumstances there is often little upside in buying the reversionary interest unless savings on ground rent and service charges justify 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; |
| 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. |
| 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| 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. |
Using our service will provide you better control over the value of your Rotherham leasehold, as your property will be more valuable and marketable in relation to the lease length should you decide to sell. The conveyancing solicitors that we work with have a in-depth market knowledge handling many hundreds of lease extensions or freehold purchase transactions.
Evan owned a studio flat in Rotherham being marketed with a lease of fraction over sixty years outstanding. Evan on an informal basis approached his freeholder a well known London-based freehold company and enquired on a premium to extend the lease. The freeholder was keen to agree an extension on non-statutory terms taking the lease to 125 years subject to an increased rent to £200 yearly. Ordinarily, ground rent would not be due on a lease extension were Evan to exercise his statutory right. Evan procured expert advice and secured an acceptable deal without going to tribunal and ending up with a market value flat.
Last month we were called by Mr and Mrs. P Adams , who moved into a studio flat in Rotherham in June 1995. We are asked if we could estimate the compensation to the landlord would likely be to prolong the lease by 90 years. Similar properties in Rotherham with an extended lease were in the region of £270,000. The mid-range amount of ground rent was £55 billed yearly. The lease ran out in 2101. Given that there were 75 years left we calculated the premium to the freeholder to extend the lease to be between £9,500 and £11,000 exclusive of professional charges.
Mr and Mrs. G White completed a one bedroom flat in Rotherham in July 2000. The question was if we could approximate the compensation to the landlord would likely be to extend the lease by an additional years. Similar premises in Rotherham with a long lease were valued around £173,800. The average amount of ground rent was £60 collected annually. The lease concluded on 26 March 2081. Given that there were 55 years left we estimated the premium to the freeholder for the lease extension to be between £31,400 and £36,200 exclusive of expenses.