Owning a apartment usually means owning a lease of the property, this is a ‘time-limited’ interest becoming shorter every day. This lease will ordinarily be granted for a fixed period of time , ordinarily 99 or 125 years, although we have seen longer and shorter terms in Rusholme. Clearly, the length of lease left reduces as time goes by. This may pass by relatively unnoticed when the flat or house needs to be sold or re-mortgaged. The fewer the years remaining the lower the value of the property and the more it will cost to obtain a lease extension. Eligible long lease owners in Rusholme have the right to extend the lease for an additional 90 years under the 1993 Leasehold Reform Act. Please give due consideration before putting off your Rusholme lease extension. Holding off the cost now simply increases the price you will eventually incur to extend your lease
Leasehold premises in Rusholme with in excess of 100 years left on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such situations there is often little upside in buying the freehold unless savings on ground rent and estate charges warrant it.
| Lender | Requirement |
|---|---|
| Chelsea 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. |
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date 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. |
| 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. |
Engaging our service will provide you enhanced control over the value of your Rusholme leasehold, as your property will be more valuable and marketable in respect of lease length should you wish to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Reuben was the the leasehold proprietor of a high value flat in Rusholme being marketed with a lease of a few days over fifty eight years left. Reuben informally spoke with his landlord being 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 subject to a new rent at the outset set at £150 per annum and doubled every twenty five years thereafter. No ground rent would be due on a lease extension were Reuben to exercise his statutory right. Reuben procured expert advice and was able to make an informed judgement and handle with the matter and readily saleable.
Last year we were e-mailed by Dr G Gómez , who purchased a ground floor apartment in Rusholme in March 1995. The question was if we could shed any light on how much (approximately) price would be for a 90 year extension to my lease. Identical flats in Rusholme with an extended lease were in the region of £250,000. The average ground rent payable was £50 billed per annum. The lease concluded on 20 February 2094. Taking into account 68 years remaining we estimated the premium to the freeholder to extend the lease to be between £9,500 and £11,000 not including expenses.
In 2010 we were e-mailed by Mr and Mrs. S Smith who, having moved into a ground floor flat in Rusholme in November 2009. We are asked if we could estimate the compensation to the landlord would likely be to extend the lease by an additional years. Comparable premises in Rusholme with 100 year plus lease were in the region of £285,000. The average ground rent payable was £55 invoiced every twelve months. The lease end date was in 2105. Having 79 years left we estimated the compensation to the landlord for the lease extension to be within £13,300 and £15,400 plus fees.