When it comes to residential leasehold property in Shortlands, you are in fact renting it for a certain period of time. In recent years flat leases are usually granted for 99 years or 125. Many leasehold owners become complacent as this seems like a lengthy period of time, you should think about extending the lease sooner as opposed to later. Accepted thinking is that the shorter the lease is the cost of extending the lease gets disproportionately greater notably when there are less than 80 years left. Leasehold owners in Shortlands with a lease nearing 81 years remaining should seriously consider extending it sooner rather than later. When the lease term has below 80 years left, under the current statute the landlord can calculate and levy a larger amount, based on a technical computation, known as “marriage value” which is due.
Leasehold residencies in Shortlands with in excess of one hundred years outstanding on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such situations there is often little upside in buying the freehold unless savings on ground rent and estate charges warrant it.
| 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. |
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage should be declined (see exception below). 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| 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. |
Using our service will provide you increased control over the value of your Shortlands leasehold, as your property will be more valuable and marketable in terms of lease length should you decide to sell. The conveyancing solicitors that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Kyle owned a 2 bedroom flat in Shortlands being marketed with a lease of fraction over 61 years unexpired. Kyle on an informal basis contacted his freeholder being a well known Bristol-based freehold company and enquired on a premium to extend the lease. The landlord was keen to agree an extension on non-statutory terms taking the lease to 125 years subject to a new rent to start with set at £150 per annum and increase every twenty five years thereafter. No ground rent would be payable on a lease extension were Kyle to invoke his statutory right. Kyle obtained expert advice and was able to make a more informed decision and deal with the matter and readily saleable.
Last Spring we were approach by Mr and Mrs. V Rose , who purchased a recently refurbished apartment in Shortlands in January 1996. The dilemma was if we could estimate the price could be for a 90 year extension to my lease. Similar properties in Shortlands with 100 year plus lease were worth £208,600. The mid-range ground rent payable was £60 billed monthly. The lease ran out in 2083. Taking into account 57 years left we approximated the premium to the landlord for the lease extension to be within £30,400 and £35,200 plus fees.
An example of a Freehold Enfranchisement decision for a Shortlands flat is Ravensbourne Lodge 4 Highland Road in February 2013. the Tribunal held that the amount payable for the freehold was £22,268