Southwold leases on residential properties are gradually diminishing in value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of your lease gets more expensive. It is the case that most Southwold tenants have the right to extend their lease by an additional 90 years by virtue of the 1993 Leasehold Reform Act. If you are a leasehold owner in Southwold you must check if your lease has between seventy and ninety years remaining. In particular once the remaining lease term slips under eighty years, the cost of any lease extension increases dramatically as an element of the premium you will incur is what is known as a marriage value
It is generally accepted that a property with in excess of one hundred years remaining is worth approximately the equivalent as a freehold. Where an further 90 years added to all but the shortest lease, the premises will be equivalent in value to a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Coventry Building Society | 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Leeds Building Society | 85 years remaining from the start 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. |
| 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 Southwold 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 conveyancing solicitor we work with provide it.
Callum was the the leasehold proprietor of a 2 bedroom flat in Southwold being marketed with a lease of a few days over 59 years outstanding. Callum informally spoke with his landlord being a well known Manchester-based freehold company for a lease extension. The landlord was keen to give an extension on non-statutory terms taking the lease to 125 years on the basis of a new rent initially set at £200 per annum and increase every twenty five years thereafter. No ground rent would be payable on a lease extension were Callum to invoke his statutory right. Callum procured expert legal guidance and secured satisfactory deal informally and ending up with a market value flat.
In 2009 we were called by Mrs A Peterson who, having purchased a one bedroom flat in Southwold in February 2004. The dilemma was if we could shed any light on how much (roughly) compensation to the landlord could be for a ninety year lease extension. Similar premises in Southwold with an extended lease were valued about £260,200. The mid-range ground rent payable was £65 collected monthly. The lease expired in 2091. Considering the 66 years left we calculated the compensation to the freeholder to extend the lease to be within £14,300 and £16,400 not including costs.
Last Autumn we were e-mailed by Mr and Mrs. T Rogers , who completed a one bedroom apartment in Southwold in November 2001. We are asked if we could approximate the price would likely be to prolong the lease by an additional years. Comparative residencies in Southwold with an extended lease were worth £198,800. The average amount of ground rent was £55 billed yearly. The lease finished on 26 April 2080. Given that there were 55 years remaining we estimated the compensation to the landlord for the lease extension to be between £33,300 and £38,400 not including costs.