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Main reasons to commence your Stilton lease extension


Main reasons to start your Stilton lease extension today:

Increase your lease and increase your Stilton property value

The rule of thumb is, all other things holding equal, the shorter the lease the more costly the premium. Qualifying leaseholders in Stilton may extend the lease for an additional 90 years under the 1993 Leasehold Reform Act. Do think carefully before delaying your Stilton lease extension. Postponing the costs today simply increases the premium you will eventually have to pay for a lease extension.

An extended lease has roughly the same value as a freehold

It is generally considered that a residential leasehold with over 100 years unexpired lease term is worth roughly the same as a freehold. Where an further ninety years added to any lease with more than 35 years unexpired, the premises will be equivalent in value to a freehold for decades to come.

Banks and Building Societies will not lend on a short lease

Lenders are really clamping down as regards to properties in Stilton with short leases. For instance you may find that their lending requirements are stricter and that they alter interest rates depending on the unexpired lease term. Some may even refuse to lend completely, so if you wanted to sell, your remaining options would be to find a cash buyer, or hope for the best at auction thus reducing the number of prospective buyers.

Lender Requirement
Bank of Scotland Minimum 70 years from the date of the mortgage.
Godiva Mortgages 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.
National Westminster Bank Mortgage term plus 30 years. For a Lifetime Mortgage, the term must be no less than 150 years minus the age of the Borrower.
The Mortgage Works Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:

Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer

New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer

Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.

SECOND HAND PROPERTIES

Unacceptable - advise Issuing Office (Will be declined):
- Unexpired lease term less than 70 years
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period less than or equal to 5 years

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 0.5% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than 85 years
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI

NEW BUILD PROPERTIES (includes office conversions)

Unacceptable - advise Issuing Office (will be declined):
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house
- Any lease which is subject to a ground rent (or annual rent) being charged which is more than on a peppercorn basis
- Any lease which is subject to a ground rent (or annual rent) being reviewed and altered on any review basis or methodology

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 0.5% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- A lease subject to a peppercorn ground rent (annual rent) charges

For the avoidance of doubt, any new build properties completed but not sold pre 30 June 2022 will only be acceptable if the lease conforms to the above guidance

* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years

LEASE EXTENSIONS

We require all lease extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where you become aware that it does not meet these requirements, please refer to the Issuing Office
Royal Bank of Scotland Mortgage term plus 30 years. For a Lifetime Mortgage, the term must be no less than 150 years minus the age of the Borrower.

Get in touch with one of our Stilton lease extension solicitors or enfranchisement solicitors

The conveyancing solicitors that we work with undertake Stilton 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.

Stilton Lease Extension Example Cases:

Lydia, Stilton, Cambridgeshire,

In the wake of 9 months of protracted negotiations with the freeholder of her ground floor apartment in Stilton, Lydia commenced the lease extension process just as her lease was nearing the crucial 80-year mark. The legal work completed in January 2013. The landlord’s costs were kept to an absolute minimum.

Stilton case:

Last Spring we were approach by Dr Kai Wright , who moved into a basement apartment in Stilton in June 2011. We are asked if we could shed any light on how much (roughly) price would likely be for a 90 year extension to my lease. Identical homes in Stilton with an extended lease were worth £260,000. The mid-range amount of ground rent was £50 billed annually. The lease lapsed on 28 March 2094. Given that there were 72 years remaining we estimated the compensation to the freeholder to extend the lease to be between £9,500 and £11,000 plus professional charges.

Stilton case:

Dr Theo Bonnet moved into a ground floor flat in Stilton in August 2010. The question was if we could approximate the price could be to prolong the lease by ninety years. Comparative properties in Stilton with a long lease were valued about £256,600. The mid-range amount of ground rent was £60 collected monthly. The lease end date was on 17 August 2074. Having 52 years as a residual term we approximated the premium to the landlord to extend the lease to be within £41,800 and £48,400 plus expenses.