It’s an underpublicised truth that a Solihull residential lease is a deteriorating asset. The lease value reduces in proportion to its lease length. The extent of this is not fully appreciated in the first few years due to the depreciation being disguised by increases in the Solihull property prices.Once your lease nears 85ish years, you need to start considering 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 dips lower than eighty years - otherwise a higher amount will be payable. The majority of flat owners in Solihull will be able to extend under the legislation; however a lawyer will be able to clarify whether you are eligibility. In some cases you may not be entitled. There are also strict timeframes and procedures to be adhered to once the process is initiated and you will need to be guided by your conveyancing solicitor throughout the process.
It is conventional wisdom that a residential leasehold with over 100 years unexpired lease term is worth approximately the same as a freehold. Where an further 90 years added to any lease with more than 30 years remaining, the residence will be worth the same as a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| 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. |
| 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. |
| 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Retaining our service will provide you increased control over the value of your Solihull leasehold, as your property will be more valuable and marketable in relation to the lease length should you decide to sell. The conveyancers that we work with have a in-depth market knowledge handling many hundreds of lease extensions or freehold purchase transactions.
Last October Kai, started to get close to the 80-year threshold with the lease on his first floor flat in Solihull. Having purchased his property two decades ago, the length of the lease was of no significance. by good luck, he noticed he needed to take action soon on a lease extension. Kai extended the lease just in the nick of time last April. Kai and the landlord subsequently agreed on a premium of £5,000 . If the lease had dipped below 80 years, the price would have become more exhorbitant by at least £1,100.
In 2010 we were e-mailed by Dr U Lefebvre who, having moved into a garden flat in Solihull in October 2011. The question was if we could shed any light on how much (approximately) compensation to the landlord would likely be for a ninety year extension to my lease. Comparable properties in Solihull with an extended lease were worth £295,000. The average ground rent payable was £45 billed quarterly. The lease end date was on 16 January 2100. Given that there were 74 years unexpired we estimated the premium to the freeholder for the lease extension to be within £8,600 and £9,800 exclusive of costs.
Mr and Mrs. O Bonnet owned a studio flat in Solihull in April 1996. We are asked if we could approximate the price could be for a 90 year extension to my lease. Identical homes in Solihull with a long lease were worth £248,000. The mid-range amount of ground rent was £65 collected yearly. The lease finished on 6 February 2089. Given that there were 63 years left we approximated the compensation to the landlord to extend the lease to be between £20,000 and £23,000 exclusive of legals.