Rumney leases on residential properties are gradually diminishing in value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of your lease becomes more expensive. It is the case that most Rumney tenants have the right to extend their lease by an additional 90 years under the 1993 Leasehold Reform Act. If you are a leasehold owner in Rumney you really ought to check if your lease has between seventy and 90 years remaining. There are compelling reasons why a Rumney leaseholder with a lease having around eighty years remaining should take action to ensure that a lease extension is actioned without delay
Leasehold premises in Rumney with in excess of one hundred years unexpired on the lease are often referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your property. In such circumstances there is often little to be gained by buying the reversionary interest unless savings on ground rent and maintenance charges justify it.
| 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. |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must also be not less than 75 years at the outset of the mortgage. |
| 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 handle Rumney 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.
Last October Ali, came dangerously near to the eighty-year threshold with the lease on his two bedroom flat in Rumney. Having purchased his property 19 years previously, the unexpired term was of minimal concern. Fortunately, he recognised he needed to take steps soon on Extending the lease. Ali extended the lease at the eleventh hour last July. Ali and the landlord who owned the flat above eventually agreed on sum of £6,000 . If the lease had slipped lower than eighty years, the premium would have escalated by at least £1,100.
Last Christmas we were phoned by Ms R Vincent , who bought a one bedroom apartment in Rumney in August 2011. We are asked if we could shed any light on how much (roughly) premium would be for a 90 year extension to my lease. Similar properties in Rumney with an extended lease were in the region of £285,000. The average ground rent payable was £45 billed per annum. The lease elapsed in 2096. Taking into account 71 years outstanding we estimated the compensation to the landlord to extend the lease to be between £12,400 and £14,200 exclusive of fees.
Last March we were phoned by Mr Sam Jackson , who moved into a recently refurbished flat in Rumney in August 1998. The question was if we could shed any light on how much (approximately) premium would likely be to extend the lease by an additional years. Comparable flats in Rumney with an extended lease were valued around £225,800. The mid-range amount of ground rent was £60 invoiced monthly. The lease concluded on 27 August 2085. Given that there were 60 years as a residual term we estimated the compensation to the landlord to extend the lease to be between £23,800 and £27,400 plus legals.