The re-sale value of a leasehold property in Stow on the Wold depends on how many years the lease has remaining. If it is near to or less than eighty years you should expect difficulties on re-sale, so it is advisable to arrange for a lease extension ahead of purchasing. It is preferable to start the lease extension process when the lease still has 82 years remaining so that a lease extension can be concluded prior to the eighty year mark. Current legislation entitles Stow on the Wold qualifying lessees to an additional term of ninety years on top of the existing term, at a nominal rent (no ground rent). The purpose of the valuation is to arrive at an opinion of the amount payable by the lessee to the freeholder for the acquisition of the lease extension.
Leasehold premises in Stow on the Wold with more than 100 years unexpired on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such situations there is often little upside in buying the reversionary interest unless savings on ground rent and service charges merit it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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. |
| 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. |
| Yorkshire 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. |
The conveyancers that we work with handle Stow on the Wold 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.
16 months ago Eli, started to get near to the eighty-year threshold with the lease on his studio flat in Stow on the Wold. In buying his home 19 years previously, the lease term was of no significance. Thankfully, it dawned on him that he would soon be paying an inflated amount for Extending the lease. Eli was able to extend his lease just ahead of time last March. Eli and the freeholder via the managing agents ultimately agreed on the final figure of £5,500 . If the lease had slid to less than 80 years, the price would have become more costly by a minimum £1,125.
Last year we were e-mailed by Mrs Anna Lewis , who owned a garden apartment in Stow on the Wold in June 1995. The dilemma was if we could estimate the compensation to the landlord would likely be for a 90 year extension to my lease. Identical premises in Stow on the Wold with 100 year plus lease were in the region of £246,800. The mid-range amount of ground rent was £60 collected annually. The lease ended on 21 April 2076. Having 50 years remaining we estimated the premium to the landlord to extend the lease to be between £44,700 and £51,600 plus expenses.
In 2012 we were approached by Mr and Mrs. P Ramírez who, having completed a ground floor apartment in Stow on the Wold in March 2008. The dilemma was if we could shed any light on how much (approximately) price would be for a 90 year lease extension. Comparable premises in Stow on the Wold with an extended lease were valued around £208,200. The mid-range ground rent payable was £65 invoiced per annum. The lease came to a finish on 18 January 2087. Considering the 61 years remaining we estimated the compensation to the landlord to extend the lease to be within £20,000 and £23,000 exclusive of fees.