Stone leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of your lease gets more expensive. Most owners of residential leasehold property in Stone enjoy rights under legislation to extend the terms of their leases. Where you are a leasehold owner in Stone you would be well advised to check if your lease has between seventy and 90 years remaining. In particular once the remaining lease term slips under eighty years, the premium due on any lease extension sharply increases as part of the premium you will incur is what is known as a marriage value
It is conventional wisdom that a property with over 100 years remaining is worth roughly the equivalent as a freehold. Where an additional ninety years added to any lease with more than 30 years left, the premises will be equivalent in value to a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| 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. |
| 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
The conveyancing solicitors that we work with handle Stone 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 recent months Ollie, came dangerously close to the 80-year threshold with the lease on his basement flat in Stone. Having purchased his flat 18 years ago, the lease term was of minimal relevance. by good luck, he became aware that he would soon be paying an escalated premium for Extending the lease. Ollie was able to extend his lease just in the nick of time last January. Ollie and the landlord eventually agreed on the final figure of £5,500 . If the lease had dropped below 80 years, the premium would have escalated by at least £925.
In 2011 we were approached by Mr Connor Martínez who, having took over the lease of a ground floor flat in Stone in August 1995. The question was if we could shed any light on how much (approximately) premium would be for a ninety year lease extension. Comparable properties in Stone with a long lease were in the region of £227,800. The mid-range ground rent payable was £45 billed yearly. The lease terminated on 25 April 2090. Having 65 years unexpired we estimated the compensation to the freeholder for the lease extension to be within £13,300 and £15,400 plus expenses.
Dr Nathaniel Clarke completed a basement flat in Stone in June 1996. We are asked if we could estimate the price would likely be for a ninety year extension to my lease. Comparative properties in Stone with 100 year plus lease were worth £275,000. The average ground rent payable was £55 invoiced yearly. The lease concluded in 2101. Given that there were 76 years outstanding we approximated the premium to the landlord for the lease extension to be within £9,500 and £11,000 not including fees.