It’s an underpublicised certainty that a Ryde residential lease is a wasting asset. As the lease term reduces so does the value of the property. The extent of this is not fully appreciated in the early years due to the loss of value being disguised by increases in the Ryde property prices.Once your lease nears 85ish years, you should start thinking about a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease dips below 80 years - otherwise a higher premium will be payable. The majority of flat owners in Ryde will be able to extend under the legislation; however a conveyancer should be able to confirm if you qualify for an extension. In some cases you may not be entitled. There are also strict deadlines and procedures to follow once the process has commenced and you will need to be guided by your conveyancer from beginning to end of the process.
Leasehold residencies in Ryde with over 100 years outstanding on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such circumstances there is often little to be gained by buying the reversionary interest unless savings on ground rent and service charges warrant it.
| 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
| 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. |
| 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 |
Using our service will provide you enhanced control over the value of your Ryde leasehold, as your property will be more valuable and marketable in respect of lease length should you wish to sell. The conveyancers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Liam was the the leasehold owner of a studio apartment in Ryde being marketed with a lease of a few days over fifty eight years left. Liam informally approached his freeholder being a well known Bristol-based freehold company and enquired on a premium to extend the lease. The freeholder indicated a willingness to extend the lease to 125 years on the basis of a rise in the rent to £50 yearly. No ground rent would be payable on a lease extension were Liam to invoke his statutory right. Liam obtained expert advice and secured an acceptable deal informally and readily saleable.
In 2010 we were phoned by Mr and Mrs. K Peterson who, having took over the lease of a ground floor flat in Ryde in July 2010. The dilemma was if we could shed any light on how much (approximately) compensation to the landlord would likely be for a 90 year lease extension. Similar residencies in Ryde with 100 year plus lease were worth £255,000. The average amount of ground rent was £50 billed monthly. The lease finished on 15 June 2096. Taking into account 71 years unexpired we estimated the premium to the landlord for the lease extension to be between £9,500 and £11,000 plus expenses.
Mr and Mrs. M Cook completed a one bedroom apartment in Ryde in January 2010. We are asked if we could approximate the compensation to the landlord could be for a ninety year lease extension. Comparative residencies in Ryde with an extended lease were valued about £254,200. The mid-range amount of ground rent was £60 invoiced monthly. The lease terminated in 2076. Considering the 51 years as a residual term we approximated the compensation to the landlord for the lease extension to be within £43,700 and £50,600 plus expenses.