It’s a harsh certainty that a South Shields residential lease is a wasting asset. The lease value reduces in proportion to its lease length. The extent of this is taken for granted in the early years due to the reduction being disguised by increases in the South Shields property prices.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 falls under 80 years - otherwise a higher premium will be due. Most flat owners in South Shields will be able to extend under the legislation; however a lawyer should be able to clarify if 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 has commenced and you will need to be guided by your conveyancing solicitor from beginning to end of the formalities.
Leasehold properties in South Shields with over one hundred years outstanding on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such circumstances there is often little to be gained by buying the reversionary interest unless savings on ground rent and maintenance 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 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
The lawyers that we work with undertake South Shields 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 conveyancer we work with provide it.
In recent months Finley, started to get near to the eighty-year threshold with the lease on his basement flat in South Shields. Having purchased his flat two decades ago, the lease term was of minimal significance. Thankfully, he noticed he would soon be paying an escalated premium for Extending the lease. Finley was able to extend his lease just ahead of time in July. Finley and the freeholder via the managing agents in the end agreed on a premium of £5,000 . If he not met the deadline, the premium would have gone up by at least £1,075.
Mr and Mrs. B Campbell completed a one bedroom flat in South Shields in April 2007. We are asked if we could approximate the premium would likely be for a 90 year extension to my lease. Identical residencies in South Shields with a long lease were worth £166,400. The average amount of ground rent was £60 collected annually. The lease finished in 2079. Having 54 years left we approximated the premium to the freeholder to extend the lease to be between £32,300 and £37,400 plus expenses.
Dr Seth Davies purchased a one bedroom flat in South Shields in June 2003. We are asked if we could estimate the compensation to the landlord would likely be to extend the lease by 90 years. Identical residencies in South Shields with a long lease were in the region of £227,800. The average amount of ground rent was £45 invoiced per annum. The lease concluded on 23 February 2090. Given that there were 65 years unexpired we estimated the compensation to the landlord to extend the lease to be within £13,300 and £15,400 not including costs.