Unfortunately that a Stretton residential lease is a wasting asset. As the lease term diminishes so does the value of the property. The extent of this is not fully appreciated in the early years due to the depreciation being disguised by increases in the Stretton property market.Once your lease gets to 85ish years, you need to start considering a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease slips below 80 years - otherwise a higher premium will be due. The majority of leasehold owners in Stretton will be able to extend under the legislation; however a conveyancer will be able to confirm whether you are eligibility. In some cases you may not be entitled. There are also strict timetables and procedures to follow once the process has commenced and you will need to be guided by your conveyancing solicitor from beginning to end of the formalities.
It is conventional wisdom that a residential leasehold with in excess of 100 years remaining is worth approximately the equivalent as a freehold. Where an further ninety years added to any lease with more than 30 years left, the property will be worth the same as a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The lawyers that we work with undertake Stretton 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.
Sebastian owned a 2 bedroom apartment in Stretton on the market with a lease of a little over 61 years remaining. Sebastian on an informal basis contacted his freeholder a well known Manchester-based freehold company for a lease extension. The landlord indicated a willingness to grant an extension taking the lease to 125 years subject to a new rent initially set at £200 per annum and increase every twenty five years thereafter. No ground rent would be payable on a lease extension were Sebastian to invoke his statutory right. Sebastian obtained expert advice and was able to make a more informed decision and handle with the matter and sell the property.
Mr and Mrs. K Gómez was assigned a lease of a newly refurbished apartment in Stretton in September 2001. We are asked if we could estimate the premium would likely be for a ninety year lease extension. Comparative flats in Stretton with an extended lease were in the region of £166,400. The average ground rent payable was £60 collected per annum. The lease elapsed in 2080. Considering the 54 years as a residual term we estimated the compensation to the freeholder to extend the lease to be within £32,300 and £37,400 not including fees.
In 2010 we were phoned by Mr and Mrs. D Dupont who, having bought a one bedroom apartment in Stretton in February 2001. The question was if we could approximate the compensation to the landlord could be to extend the lease by ninety years. Similar properties in Stretton with a long lease were in the region of £227,800. The mid-range ground rent payable was £45 invoiced every twelve months. The lease ended in 2091. Taking into account 65 years left we calculated the compensation to the freeholder to extend the lease to be within £13,300 and £15,400 plus expenses.