The re-sale value of a leasehold property in Southwold depends on how long the lease has left to run. If it is close to or fewer than 80 years you should foresee difficulties on re-sale, so it is advisable to arrange for the lease to be extended prior to purchasing. It is preferable to start the process of extending the lease is when the lease still has 82 years remaining so that a lease extension can be addressed well before the eighty year mark. Leasehold Reform legislation entitles Southwold qualifying lessees to obtain a lease extension of 90 years on top of the remaining lease term at a peppercorn rent (that is, rent free). The purpose of the valuation is to determine the amount payable by the lessee to the freeholder for the acquisition of the lease extension.
Leasehold residencies in Southwold with more than one hundred years outstanding 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 property. In such situations there is often little to be gained by buying the reversionary interest unless savings on ground rent and service charges merit it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
Irrespective of whether you are a tenant or a landlord in Southwold,the lease extension experts that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Southwold valuers.
Last year Sam, started to get close to the 80-year mark with the lease on his two bedroom apartment in Southwold. Having purchased his flat two decades ago, the length of the lease was of no importance. Fortunately, he realised he needed to take action soon on a lease extension. Sam extended the lease just under the wire last March. Sam and the landlord who owned the flat above ultimately settled on a premium of £6,000 . If he had missed the deadline, the premium would have become more costly by a minimum £1,050.
Last Summer we were contacted by Mr and Mrs. O Martin , who acquired a one bedroom apartment in Southwold in August 2002. We are asked if we could approximate the premium would be to prolong the lease by a further 90 years. Comparative residencies in Southwold with a long lease were worth £300,000. The average ground rent payable was £50 invoiced per annum. The lease lapsed in 2102. Given that there were 76 years outstanding we estimated the premium to the landlord for the lease extension to be within £8,600 and £9,800 exclusive of expenses.
Last Autumn we were approach by Mrs Alicia André , who purchased a basement flat in Southwold in January 2006. The dilemma was if we could estimate the price could be for a ninety year extension to my lease. Identical flats in Southwold with 100 year plus lease were worth £257,800. The average ground rent payable was £65 invoiced annually. The lease lapsed in 2091. Having 65 years as a residual term we approximated the premium to the freeholder for the lease extension to be between £18,100 and £20,800 exclusive of legals.