It’s an underpublicised certainty that a Selly Oak 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 first few years due to the reduction being disguised by increases in the Selly Oak property prices.Once your lease gets to 85ish years, you need to 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 slips below eighty years - otherwise a higher amount will be due. The majority of leasehold owners in Selly Oak will be able to extend under the legislation; however a conveyancer will be able to clarify whether you qualify for an extension. In some situations you may not be entitled. There are also strict deadlines and procedures to be adhered to once the process has commenced and you will need to be guided by your conveyancer throughout the formalities.
It is generally considered that a property with more than one hundred years unexpired lease term is worth roughly the equivalent as a freehold. Where an further 90 years added to any lease with more than 35 years remaining, the property will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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; |
| Coventry Building Society | 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 be at least 30 years plus the term of the mortgage 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 |
| 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 lawyers that we work with undertake Selly Oak 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 year Aaron, came precariously close to the eighty-year mark with the lease on his ground floor flat in Selly Oak. Having bought his flat 18 years previously, the length of the lease was of little relevance. Fortunately, he realised he would imminently be paying an escalated premium for Extending the lease. Aaron extended the lease just in the nick of time last March. Aaron and the freeholder eventually settled on an amount of £5,000 . If the lease had dipped below 80 years, the premium would have increased by a minimum £1,125.
In 2013 we were phoned by Mr E Rose who, having purchased a basement apartment in Selly Oak in January 2007. The dilemma was if we could approximate the price would likely be for a 90 year extension to my lease. Comparative properties in Selly Oak with an extended lease were valued about £166,400. The mid-range ground rent payable was £60 invoiced yearly. The lease elapsed on 21 May 2080. Having 54 years remaining we estimated the premium to the freeholder to extend the lease to be within £32,300 and £37,400 exclusive of expenses.
In 2012 we were e-mailed by Mr J Wright who, having owned a garden flat in Selly Oak in March 1998. The dilemma was if we could shed any light on how much (roughly) premium would be for a 90 year extension to my lease. Identical properties in Selly Oak with a long lease were valued around £227,800. The mid-range amount of ground rent was £45 billed yearly. The lease ended on 9 March 2091. Considering the 65 years unexpired we estimated the premium to the freeholder to extend the lease to be between £13,300 and £15,400 not including expenses.