Owning a apartment usually means owning a lease of the property, this is a ‘time-limited’ interest becoming shorter every day. The lease will normally be granted for a fixed period of time , ordinarily 99 or 125 years, although we have witnessed longer and shorter terms in Street. Inevitably, the length of lease left reduces as time goes by. This may slip by relatively unnoticed when the property needs to be disposed of or re-mortgaged. The fewer the years remaining the less it is worth and the more it will cost to obtain a lease extension. Qualifying leaseholders in Street have the right to extend the lease for an additional 90 years under Leasehold Reform legislation. You should give due consideration before putting off your Street lease extension. Holding off the cost now simply increases the price you will ultimately have to pay to extend your lease
It is conventional wisdom that a property with over 100 years remaining is worth roughly the same as a freehold. Where an additional ninety years added to any lease with more than 35 years unexpired, the residence 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 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 30 years plus the term of the mortgage at the outset 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 Street 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.
Last October Jake, started to get near to the 80-year mark with the lease on his two bedroom flat in Street. Having bought his home two decades ago, the length of the lease was of no significance. Thankfully, he became aware that he would imminently be paying an escalated premium for a lease extension. Jake arranged for a lease extension just in the nick of time in June. Jake and the landlord in the end agreed on a premium of £5,000 . If he failed to meet the deadline, the price would have escalated by a minimum £850.
Dr F Green was assigned a lease of a ground floor apartment in Street in June 1999. The question was if we could approximate the price would be to prolong the lease by ninety years. Comparative residencies in Street with an extended lease were valued around £223,400. The average ground rent payable was £60 billed yearly. The lease ended in 2085. Having 59 years outstanding we approximated the premium to the landlord for the lease extension to be between £27,600 and £31,800 not including legals.
In 2011 we were contacted by Ms E Robinson who, having bought a one bedroom flat in Street in November 2009. The dilemma was if we could shed any light on how much (approximately) compensation to the landlord could be for a ninety year lease extension. Comparative properties in Street with an extended lease were in the region of £205,000. The mid-range ground rent payable was £50 invoiced monthly. The lease ran out on 25 October 2105. Taking into account 79 years outstanding we calculated the compensation to the freeholder for the lease extension to be within £8,600 and £9,800 not including fees.