The market value of a leasehold property in Somerton depends on how many years the lease has left to run. If it is close to or fewer than eighty years you should foresee difficulties on re-sale, so it is advisable to arrange for the lease to be extended before buying. It is preferable to commence the process of extending the lease is when the lease still has 82 years unexpired so that a lease extension can be finalised in advance of the 80 year threshold. Leasehold Reform legislation entitles Somerton qualifying lessees to an additional term of 90 years on top of the unexpired term, at a peppercorn rent (zero ground rent). The purpose of the valuation is to arrive at an opinion of the premium payable by the lessee to the freeholder for the purchase of the lease extension.
It is generally accepted that a property with in excess of one hundred years unexpired lease term is worth approximately the same as a freehold. Where an further ninety years added to any lease with more than 35 years remaining, the property will be equivalent in value to a freehold for many years ahead.
| 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. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| 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. |
The conveyancers that we work with handle Somerton lease extensions and help protect your position. A lease extension can be arranged to be completed to coincide with a change of ownership so the costs of the lease extension are paid for using part of the sale proceeds. You really do need expert legal advice in this difficult and technical area of law. The lawyer we work with provide it.
Gabriel was the the leasehold proprietor of a studio apartment in Somerton being sold with a lease of fraction over 72 years remaining. Gabriel informally approached his freeholder being a well known local-based freehold company for a lease extension. The freeholder was keen to agree an extension on non-statutory terms taking the lease to 125 years on the basis of an increased rent to £100 per annum. No ground rent would be due on a lease extension were Gabriel to invoke his statutory right. Gabriel procured expert advice and secured an acceptable deal informally and readily saleable.
In 2011 we were phoned by Dr Luca Smith who, having owned a one bedroom flat in Somerton in August 1995. The question was if we could shed any light on how much (approximately) price would be to prolong the lease by a further 90 years. Identical properties in Somerton with a long lease were in the region of £260,000. The mid-range ground rent payable was £50 invoiced quarterly. The lease concluded on 11 March 2098. Considering the 73 years remaining we calculated the premium to the landlord to extend the lease to be within £9,500 and £11,000 exclusive of fees.
Mr and Mrs. Y Girard bought a ground floor flat in Somerton in October 2006. The dilemma was if we could shed any light on how much (roughly) price would likely be for a ninety year lease extension. Similar homes in Somerton with an extended lease were valued about £264,000. The average ground rent payable was £60 collected annually. The lease came to a finish in 2078. Taking into account 53 years left we approximated the compensation to the freeholder to extend the lease to be between £37,100 and £42,800 exclusive of legals.