Unfortunately that a Sedbergh residential lease is a deteriorating asset. The lease value reduces in proportion to its lease length. The extent of this is taken for granted in the early years due to the loss of value being disguised by increases in the Sedbergh property market.Where your lease has approximately ninety years left, you need to start thinking about a lease extension. If the number of years remaining falls below 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. The marriage fee is the amount of extra value that a lease extension will add the property The majority of flat owners in Sedbergh 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 situations you may not qualify. There are also strict timeframes and procedures to follow once the process has commenced and you will need to be guided by your conveyancing solicitor from beginning to end of the process.
It is generally considered that a property with in excess of one hundred years remaining is worth roughly the equivalent as a freehold. Where an further ninety years added to all but the shortest lease, the residence will be worth the same as a freehold for many years in the future.
| 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. |
| 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. |
The conveyancers that we work with procure Sedbergh 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.
Last year Charlie, started to get close to the 80-year threshold with the lease on his basement flat in Sedbergh. In buying his home 19 years previously, the unexpired term was of no significance. Fortunately, he noticed he needed to take steps soon on Extending the lease. Charlie extended the lease just under the wire last March. Charlie and the freeholder via the management company eventually settled on an amount of £5,500 . If the lease had descended below eighty years, the premium would have gone up by a minimum £1,025.
Ms D Martínez owned a purpose-built apartment in Sedbergh in September 1996. The dilemma was if we could estimate the premium could be for a ninety year extension to my lease. Comparative properties in Sedbergh with an extended lease were worth £227,800. The mid-range amount of ground rent was £45 collected monthly. The lease termination date was on 15 March 2090. Given that there were 65 years remaining we calculated the compensation to the landlord for the lease extension to be between £13,300 and £15,400 plus expenses.
Last Christmas we were called by Mrs M Harris , who purchased a newly refurbished flat in Sedbergh in August 2009. We are asked if we could estimate the compensation to the landlord could be to prolong the lease by a further 90 years. Comparative properties in Sedbergh with an extended lease were valued about £270,000. The average amount of ground rent was £55 invoiced yearly. The lease termination date was in 2100. Considering the 75 years as a residual term we estimated the compensation to the freeholder to extend the lease to be between £9,500 and £11,000 plus expenses.