It’s an underpublicised truth that a Shrewsbury residential lease is a deteriorating asset. As the lease term diminishes so does the value of the property. The extent of this is not fully appreciated in the early years due to the reduction being disguised by increases in the Shrewsbury property market.Once your lease nears 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 lower than eighty years - otherwise a higher amount will be payable. Most flat owners in Shrewsbury will be able to extend under the legislation; however a conveyancer will be able to clarify whether you are eligibility. In some situations you may not be entitled. There are also strict timeframes and procedures to be adhered to once the process has commenced and you will need to be guided by your lawyer throughout the formalities.
It is generally accepted that a property with over one hundred years remaining is worth approximately the equivalent as a freehold. Where an additional ninety years added to any lease with more than 45 years unexpired, the premises will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage should be declined (see exception below). Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office. 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; |
| 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Engaging our service gives you better control over the value of your Shrewsbury leasehold, as your property will be more valuable and marketable in terms of lease length should you want to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Trailing lengthy correspondence with the freeholder of her leasehold flat in Shrewsbury, Lydia initiated the lease extension process just as the lease was coming close to the all-important 80-year deadline. The legal work was concluded in September 2009. The freeholder’s charges were negotiated to slightly above 650 pounds.
In 2013 we were e-mailed by Mr and Mrs. J Young who, having was assigned a lease of a studio apartment in Shrewsbury in June 1998. The dilemma was if we could estimate the compensation to the landlord would likely be to prolong the lease by an additional years. Identical properties in Shrewsbury with an extended lease were valued around £210,000. The mid-range ground rent payable was £50 collected yearly. The lease terminated in 2105. Considering the 80 years unexpired we estimated the compensation to the landlord to extend the lease to be between £8,600 and £9,800 plus expenses.
Last Autumn we were approach by Mr and Mrs. O Thompson , who acquired a one bedroom flat in Shrewsbury in May 2001. The dilemma was if we could estimate the compensation to the landlord could be for a 90 year lease extension. Identical properties in Shrewsbury with an extended lease were valued around £275,000. The average amount of ground rent was £45 collected every twelve months. The lease ended on 17 January 2094. Having 69 years as a residual term we calculated the premium to the freeholder for the lease extension to be within £12,400 and £14,200 plus costs.