Rowen residential property held on a long lease is a depreciating asset because a leaseholder merely owns the property for a period of years.
It is conventional wisdom that a property with over 100 years unexpired lease term is worth roughly the same as a freehold. Where an additional ninety years added to any lease with more than 30 years remaining, the residence will be worth the same as 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; |
| Halifax | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. |
| Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
| 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 |
The lawyers that we work with procure Rowen 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 lawyer we work with provide it.
In the wake of 9 months of unsuccessful negotiations with the landlord of her ground floor flat in Rowen, Leah commenced the lease extension process just as her lease was coming close to the all-important eighty-year mark. The legal work was finalised in August 2014. The freeholder’s charges were kept to an absolute minimum.
Last Winter we were called by Mr Samuel Cooper , who acquired a basement apartment in Rowen in August 2012. The dilemma was if we could shed any light on how much (roughly) compensation to the landlord would likely be to prolong the lease by 90 years. Identical homes in Rowen with 100 year plus lease were valued about £189,000. The average amount of ground rent was £55 invoiced monthly. The lease finished in 2078. Given that there were 53 years unexpired we estimated the premium to the freeholder to extend the lease to be between £28,500 and £33,000 plus professional charges.
Last Christmas we were phoned by Dr D Wood , who acquired a first floor apartment in Rowen in January 1995. We are asked if we could approximate the premium could be to extend the lease by ninety years. Comparable properties in Rowen with an extended lease were worth £290,000. The average amount of ground rent was £45 collected yearly. The lease terminated on 17 January 2098. Given that there were 73 years as a residual term we calculated the premium to the landlord for the lease extension to be within £8,600 and £9,800 plus fees.