It’s an underpublicised truth that a Spalding residential lease is a wasting asset. As the lease term reduces so does the value of the property. The extent of this is taken for granted in the first few years due to the reduction being disguised by increases in the Spalding property market.Where your lease has approximately 90 years left, 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 slips lower than eighty years - otherwise a higher amount will be due. The majority of leasehold owners in Spalding will be able to extend under the legislation; however a conveyancer will be able to clarify if you are eligibility. In some cases you may not qualify. There are also strict deadlines and procedures to follow once the process has commenced and you will need to be guided by your conveyancing solicitor from beginning to end of the formalities.
It is conventional wisdom that a residential leasehold with in excess of 100 years remaining is worth approximately the same as a freehold. Where an further ninety years added to any lease with more than 35 years unexpired, the premises will be worth the same as a freehold for many years ahead.
| 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 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; |
| 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
The conveyancers that we work with handle Spalding 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.
Omar was the the leasehold owner of a studio apartment in Spalding on the market with a lease of a little over 61 years unexpired. Omar informally approached his landlord being a well known Bristol-based freehold company for a lease extension. The landlord indicated a willingness to extend the lease to 125 years subject to a rise in the rent to £100 yearly. No ground rent would be due on a lease extension were Omar to exercise his statutory right. Omar obtained expert advice and secured an acceptable resolution without resorting to tribunal and ending up with a market value flat.
Mr and Mrs. F Gómez bought a newly refurbished apartment in Spalding in April 1998. The dilemma was if we could estimate the compensation to the landlord would be for a ninety year lease extension. Comparative homes in Spalding with an extended lease were valued around £201,200. The average amount of ground rent was £55 billed annually. The lease ended in 2081. Taking into account 56 years left we approximated the premium to the landlord to extend the lease to be within £31,400 and £36,200 plus expenses.
Last Spring we were approach by Ms Lucy Scott , who acquired a newly refurbished apartment in Spalding in September 2001. We are asked if we could approximate the premium would be to extend the lease by an additional years. Comparable premises in Spalding with 100 year plus lease were worth £300,000. The average amount of ground rent was £50 invoiced monthly. The lease ended on 3 September 2101. Given that there were 76 years as a residual term we estimated the premium to the landlord for the lease extension to be between £8,600 and £9,800 not including expenses.