Stowmarket 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 the lease gets more expensive. It is the case that most Stowmarket tenants have the right to extend their lease by an additional ninety years by virtue of the 1993 Leasehold Reform Act. If you are a leasehold owner in Stowmarket you would be well advised to see if your lease has between seventy and 90 years left. In particular once the remaining lease term slips under 80 years, the compensation to the landlord for any lease extension increases dramatically as an element of the premium you pay is what is known as a marriage value
Leasehold residencies in Stowmarket with in excess of one hundred years left on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such circumstances there is often little upside in purchasing the reversionary interest unless savings on ground rent and estate charges merit it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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. |
| Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
Retaining our service gives you enhanced control over the value of your Stowmarket leasehold, as your property will be more valuable and marketable in respect of lease length should you decide to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Last Christmas Isaac, started to get close to the eighty-year threshold with the lease on his ground floor apartment in Stowmarket. In buying his property twenty years previously, the unexpired term was of minimal importance. Luckily, he realised he would soon be paying way over the odds for a lease extension. Isaac arranged for a lease extension at the eleventh hour in July. Isaac and the freeholder eventually agreed on an amount of £5,500 . If the lease had slid to less than 80 years, the premium would have increased by a minimum £925.
Last Christmas we were e-mailed by Mr and Mrs. A Turner , who was assigned a lease of a one bedroom flat in Stowmarket in October 1996. We are asked if we could shed any light on how much (roughly) price could be to prolong the lease by ninety years. Similar premises in Stowmarket with an extended lease were in the region of £233,200. The average ground rent payable was £60 invoiced monthly. The lease terminated on 21 October 2087. Having 61 years as a residual term we approximated the premium to the freeholder to extend the lease to be within £22,800 and £26,400 exclusive of costs.
In 2013 we were approached by Mr R Leroy who, having owned a one bedroom apartment in Stowmarket in September 2006. We are asked if we could approximate the compensation to the landlord could be to extend the lease by 90 years. Comparable premises in Stowmarket with a long lease were worth £174,200. The mid-range amount of ground rent was £55 invoiced monthly. The lease finished on 9 November 2077. Given that there were 51 years outstanding we calculated the premium to the landlord to extend the lease to be between £31,400 and £36,200 exclusive of fees.