Shelfield leases on residential properties are gradually diminishing in value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of the lease gets more expensive. Most owners of residential leasehold property in Shelfield enjoy rights under legislation to extend the terms of their leases. If you are a leasehold owner in Shelfield you really ought to check if your lease has between seventy and 90 years remaining. In particular once the remaining lease term slips under 80 years, the compensation to the landlord for any lease extension increases dramatically as an element of the premium you pay is what is known as a marriage value
It is conventional wisdom that a property with more than one hundred years remaining is worth approximately the same as a freehold. Where an further ninety years added to any lease with more than 45 years unexpired, the property will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Halifax | 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. |
Irrespective of whether you are a tenant or a freeholder in Shelfield,the lease extension lawyers that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Shelfield valuers.
Jude owned a high value apartment in Shelfield being sold with a lease of just over sixty years remaining. Jude on an informal basis spoke with his freeholder being a well known local-based freehold company for a lease extension. The freeholder indicated a willingness to extend the lease to 125 years on the basis of an increased rent to £100 per annum. Ordinarily, ground rent would not be payable on a lease extension were Jude to invoke his statutory right. Jude obtained expert advice and was able to make a more informed judgement and handle with the matter and ending up with a market value flat.
In 2011 we were contacted by Mr F Cooper who, having acquired a basement apartment in Shelfield in November 1997. The dilemma was if we could shed any light on how much (roughly) compensation to the landlord would likely be for a 90 year lease extension. Similar flats in Shelfield with a long lease were worth £275,000. The mid-range ground rent payable was £45 collected monthly. The lease concluded on 20 January 2095. Having 69 years unexpired we approximated the premium to the landlord for the lease extension to be within £12,400 and £14,200 exclusive of legals.
In 2013 we were approached by Mr and Mrs. P Cox who, having purchased a newly refurbished flat in Shelfield in May 2012. The dilemma was if we could estimate the price would likely be for a 90 year lease extension. Identical properties in Shelfield with 100 year plus lease were valued around £216,000. The mid-range amount of ground rent was £60 billed annually. The lease came to a finish on 24 October 2084. Taking into account 58 years left we estimated the premium to the freeholder to extend the lease to be between £28,500 and £33,000 plus fees.