Unfortunately that a Shaftesbury residential lease is a deteriorating 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 depreciation being disguised by increases in the Shaftesbury property market.Where your lease has approximately 90 years left, you should start thinking about a lease extension. If the number of years remaining drops below 80 years, you will then be required to pay half of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of extra value that a lease extension will add the property The majority of leasehold owners in Shaftesbury will be able to extend under the legislation; however a conveyancing solicitor will be able to confirm if you qualify for an extension. In some cases you may not be entitled. 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.
Leasehold premises in Shaftesbury with more than one hundred years outstanding on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such situations there is often little to be gained by purchasing the reversionary interest unless savings on ground rent and service charges warrant it.
| Lender | Requirement |
|---|---|
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| 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. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The conveyancing solicitors that we work with handle Shaftesbury 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.
Two years ago Jayden, came perilously close to the 80-year threshold with the lease on his purpose- built apartment in Shaftesbury. In buying his home two decades ago, the unexpired term was of no significance. As luck would have it, he noticed he would imminently be paying way over the odds for Extending the lease. Jayden was able to extend his lease at the eleventh hour in September. Jayden and the landlord who owned the flat above in the end agreed on an amount of £6,000 . If he had missed the deadline, the price would have gone up by a minimum £925.
In 2011 we were e-mailed by Mr and Mrs. N Laurent who, having completed a newly refurbished flat in Shaftesbury in February 2003. We are asked if we could estimate the compensation to the landlord could be for a ninety year lease extension. Comparative homes in Shaftesbury with a long lease were valued about £233,200. The mid-range ground rent payable was £60 billed every twelve months. The lease elapsed on 3 August 2087. Taking into account 61 years left we calculated the premium to the landlord for the lease extension to be between £22,800 and £26,400 plus expenses.
Last Spring we were called by Mr and Mrs. K Howard , who was assigned a lease of a basement flat in Shaftesbury in March 2012. The question was if we could shed any light on how much (roughly) premium could be to extend the lease by a further 90 years. Comparable properties in Shaftesbury with a long lease were worth £166,800. The average amount of ground rent was £50 billed every twelve months. The lease ran out on 23 May 2076. Considering the 50 years remaining we estimated the compensation to the landlord for the lease extension to be between £32,300 and £37,400 exclusive of costs.