The market value of a leasehold property in Stroud is impacted by how many years the lease has left to run. If it is close to or less than eighty years you should envisage difficulties on re-sale, so it is recommended to arrange for a lease extension prior to purchasing. Ideally one should start the lease extension process when the lease still has 82 years remaining so that formalities can be concluded ahead of the 80 year mark. Current legislation entitles Stroud qualifying lessees to a 90 year extension added to their residual lease term (ie if your lease has 50 years remaining the statutory lease extension will provide a new term of 140 years). The reason 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.
It is conventional wisdom that a property with in excess of one hundred years remaining is worth roughly the equivalent as a freehold. Where an additional ninety years added to all but the shortest lease, the premises will be equivalent in value to a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage should be declined (see exception below). Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office. 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. |
| Coventry Building Society | 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. |
The lawyers that we work with handle Stroud 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.
In 2014 Charlie, came critically close to the eighty-year threshold with the lease on his garden apartment in Stroud. In buying his home twenty years previously, the lease term was of no interest. Luckily, he recognised he would soon be paying an escalated premium for Extending the lease. Charlie was able to extend his lease at the eleventh hour last March. Charlie and the freeholder eventually settled on sum of £5,000 . If he failed to meet the deadline, the figure would have become more costly by at least £1,000.
In 2014 we were approached by Mr S Bailey who, having took over the lease of a newly refurbished flat in Stroud in November 1999. The question was if we could shed any light on how much (roughly) compensation to the landlord would likely be for a ninety year lease extension. Identical properties in Stroud with an extended lease were worth £183,600. The average ground rent payable was £65 collected yearly. The lease expired in 2083. Having 57 years outstanding we approximated the compensation to the landlord to extend the lease to be between £28,500 and £33,000 not including professional charges.
Last Winter we were contacted by Mr and Mrs. S Davies , who completed a garden apartment in Stroud in May 2003. The dilemma was if we could approximate the price could be for a ninety year lease extension. Similar flats in Stroud with an extended lease were valued around £250,000. The mid-range ground rent payable was £50 invoiced yearly. The lease expiry date was on 17 May 2094. Given that there were 68 years outstanding we calculated the premium to the freeholder to extend the lease to be within £10,500 and £12,000 exclusive of professional charges.