Streetly 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 becomes more expensive. It is the case that most Streetly tenants have the right to extend their lease by an additional 90 years in accordance with the 1993 Leasehold Reform Act. Where you are a leasehold owner in Streetly you really ought to investigate if your lease has between 70 and ninety years remaining. In particular once the remaining lease term slips under 80 years, the compensation to the landlord for any lease extension sharply increases as part of the premium you pay is what is known as a marriage value
Leasehold premises in Streetly with more than 100 years remaining 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 situations there is often little to be gained by purchasing the freehold unless savings on ground rent and maintenance charges justify it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | 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. |
| 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. |
| 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 conveyancing solicitors that we work with procure Streetly 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.
Toby owned a 2 bedroom flat in Streetly on the market with a lease of just over 72 years outstanding. Toby on an informal basis spoke with his freeholder a well known Bristol-based freehold company for a lease extension. The landlord was prepared to give an extension on non-statutory terms taking the lease to 125 years subject to a rise in the rent to £200 yearly. No ground rent would be due on a lease extension were Toby to invoke his statutory right. Toby obtained expert advice and secured satisfactory resolution without going to tribunal and readily saleable.
Mr and Mrs. T Stewart acquired a first floor flat in Streetly in October 2006. The dilemma was if we could estimate the price would likely be for a 90 year lease extension. Similar residencies in Streetly with a long lease were worth £280,000. The average ground rent payable was £45 billed annually. The lease ended on 1 April 2096. Having 70 years unexpired we approximated the compensation to the freeholder for the lease extension to be between £12,400 and £14,200 exclusive of expenses.
Last Autumn we were called by Ms P White , who took over the lease of a garden apartment in Streetly in July 2009. We are asked if we could estimate the premium would likely be to extend the lease by 90 years. Comparable homes in Streetly with an extended lease were worth £223,400. The mid-range amount of ground rent was £60 billed every twelve months. The lease concluded in 2085. Considering the 59 years outstanding we calculated the premium to the landlord to extend the lease to be within £27,600 and £31,800 plus legals.