For anyone whose Stonehouse home is held on a long lease, the message is clear – if you ignore the situation, the property will eventually revert to the freeholder, leaving you empty-handed. The shorter the lease the lower the value of the property and the more it will cost to obtain a lease extension.
Leasehold premises in Stonehouse with over 100 years outstanding 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 home. In such circumstances there is often little upside in buying the reversionary interest unless savings on ground rent and service charges justify it.
| Lender | Requirement |
|---|---|
| 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. |
| Coventry Building Society | 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. |
| 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 conveyancing solicitors that we work with undertake Stonehouse 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 lawyer we work with provide it.
In 2014 Hunter, started to get near to the eighty-year mark with the lease on his one bedroom flat in Stonehouse. In buying his home two decades ago, the unexpired term was of no importance. Thankfully, he became aware that he needed to take steps soon on a lease extension. Hunter arranged for a lease extension just in the nick of time in April. Hunter and the landlord in the end settled on the final figure of £5,000 . If he had missed the deadline, the price would have escalated by at least £1,025.
Last Christmas we were approach by Dr W Khan , who completed a one bedroom flat in Stonehouse in September 2012. The dilemma was if we could estimate the premium would likely be for a 90 year lease extension. Comparative premises in Stonehouse with an extended lease were worth £166,400. The average ground rent payable was £60 billed monthly. The lease ended on 15 October 2079. Having 54 years left we estimated the premium to the freeholder to extend the lease to be between £32,300 and £37,400 plus professional charges.
In 2011 we were contacted by Mr T Martínez who, having owned a first floor apartment in Stonehouse in September 2010. We are asked if we could estimate the price would be to prolong the lease by ninety years. Similar premises in Stonehouse with a long lease were valued about £227,800. The average amount of ground rent was £45 invoiced per annum. The lease ended on 1 October 2090. Considering the 65 years outstanding we approximated the premium to the landlord for the lease extension to be between £13,300 and £15,400 plus professional charges.