Chances are that if you own a flat in Somerton you actually own a long leasehold interest over your property
Leasehold residencies in Somerton with in excess of 100 years remaining on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such circumstances there is often little upside in buying the reversionary interest unless savings on ground rent and estate charges justify it.
| Lender | Requirement |
|---|---|
| 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; |
| 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Retaining our service will provide you better control over the value of your Somerton leasehold, as your property will be more valuable and saleable 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.
Last year Alfie, came precariously close to the 80-year threshold with the lease on his one bedroom flat in Somerton. In buying his flat two decades ago, the unexpired term was of no interest. Fortunately, he noticed he would imminently be paying an inflated amount for a lease extension. Alfie extended the lease just under the wire last January. Alfie and the landlord eventually settled on a premium of £5,000 . If the lease had fallen lower than eighty years, the sum would have gone up by a minimum £975.
Last April we were e-mailed by Mr N Gray , who was assigned a lease of a one bedroom flat in Somerton in March 2000. We are asked if we could shed any light on how much (approximately) premium would be for a ninety year lease extension. Similar residencies in Somerton with an extended lease were worth £280,000. The average ground rent payable was £55 invoiced monthly. The lease concluded in 2104. Having 78 years unexpired we calculated the compensation to the landlord to extend the lease to be between £13,300 and £15,400 exclusive of legals.
Mr E Rodríguez completed a first floor apartment in Somerton in June 1997. The dilemma was if we could estimate the price would likely be for a ninety year extension to my lease. Comparable premises in Somerton with a long lease were in the region of £186,000. The average amount of ground rent was £65 invoiced annually. The lease lapsed in 2084. Considering the 58 years outstanding we estimated the premium to the freeholder for the lease extension to be within £26,600 and £30,800 not including expenses.