Unfortunately that a Stokesley residential lease is a wasting asset. The lease value reduces in proportion to its lease length. The extent of this is taken for granted in the first few years due to the loss of value being disguised by increases in the Stokesley property prices.Once your lease nears 85ish years, you need to start thinking about a lease extension. If lease term drops under 80 years, you will then be required to pay half of the property's 'marriage value' on top of the usual cost of the lease extension to the landlord. Marriage value is the amount of additional value that a lease extension will add the property Most leasehold owners in Stokesley will be able to extend under the legislation; however a conveyancer will be able to clarify whether you qualify for an extension. In some cases you may not be entitled. There are also strict timeframes and procedures to be adhered to once the process is initiated and you will need to be guided by your conveyancer for the duration of the formalities.
Leasehold properties in Stokesley with in excess of 100 years left on the lease are sometimes referred to as ‘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 upside in purchasing the freehold unless savings on ground rent and estate charges merit it.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
The conveyancers that we work with handle Stokesley 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.
After unsuccessful discussions with the freeholder of her first floor flat in Stokesley, Alicia started the lease extension process just as the lease was coming close to the all-important 80-year mark. The transaction completed in April 2014. The freeholder’s costs were kept to an absolute minimum.
Last month we were called by Dr A Harris , who moved into a purpose-built flat in Stokesley in July 2004. The question was if we could estimate the premium would likely be to extend the lease by an additional years. Comparative residencies in Stokesley with 100 year plus lease were valued about £261,600. The average amount of ground rent was £60 collected yearly. The lease expired on 24 February 2078. Considering the 52 years remaining we approximated the premium to the landlord for the lease extension to be between £39,000 and £45,000 plus expenses.
In 2009 we were e-mailed by Dr Seth Ricardo who, having acquired a purpose-built flat in Stokesley in May 2012. We are asked if we could approximate the premium could be for a 90 year extension to my lease. Comparative premises in Stokesley with an extended lease were valued around £218,000. The mid-range ground rent payable was £45 collected every twelve months. The lease termination date was on 24 May 2089. Given that there were 63 years unexpired we calculated the premium to the landlord for the lease extension to be within £17,100 and £19,800 plus costs.