Unfortunately that a Springwell residential lease is a deteriorating asset. The lease value reduces in proportion to its lease length. The extent of this is not fully appreciated in the first few years due to the depreciation being disguised by increases in the Springwell property prices.Where your lease has approximately ninety years left, you should start considering a lease extension. If the number of years remaining drops below 80 years, you will end up paying half of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. The marriage fee is the amount of extra value that a lease extension will add the property Most flat owners in Springwell will be able to extend under the legislation; however a conveyancer will be able to confirm whether you qualify for an extension. In some cases you may not qualify. There are also strict timeframes and procedures to follow once the process has commenced and you will need to be guided by your conveyancing solicitor throughout the formalities.
It is conventional wisdom that a residential leasehold with over one hundred years remaining is worth approximately the equivalent as a freehold. Where an further ninety years added to all but the shortest lease, the property will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Birmingham Midshires | 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
The conveyancers that we work with undertake Springwell 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.
In the wake of eight months of lengthy negotiations with the freeholder of her one bedroom flat in Springwell, Kate commenced the lease extension process just as the lease was approaching the critical 80-year mark. The lease extension was finalised in February 2015. The freeholder’s fees were negotiated to less than 650 GBP.
In 2014 we were phoned by Mr and Mrs. F Patel who, having acquired a purpose-built flat in Springwell in June 2012. The question was if we could approximate the compensation to the landlord would likely be for a ninety year extension to my lease. Identical properties in Springwell with 100 year plus lease were valued about £208,200. The mid-range amount of ground rent was £65 invoiced per annum. The lease termination date was on 10 March 2087. Given that there were 61 years remaining we calculated the premium to the freeholder to extend the lease to be within £20,000 and £23,000 not including expenses.
Mrs H Lambert took over the lease of a basement apartment in Springwell in March 1998. The dilemma was if we could shed any light on how much (roughly) price would likely be for a 90 year lease extension. Comparable flats in Springwell with a long lease were valued about £260,000. The average ground rent payable was £50 invoiced monthly. The lease finished on 4 October 2098. Given that there were 72 years as a residual term we estimated the compensation to the freeholder for the lease extension to be between £9,500 and £11,000 not including fees.