The re-sale value of a leasehold property in Stroud is impacted by how many years the lease has remaining. If it is close to or less than 80 years you should foresee difficulties on re-sale, so it is recommended to arrange for a lease extension before buying. It is ideal to start the process of extending the lease is when the lease still has 82 years to run so that formalities can be concluded prior to the eighty year mark. Leasehold Reform legislation entitles Stroud qualifying lessees to obtain a lease extension of ninety years in addition to the remaining length of the lease at a peppercorn rent (that is, rent free). The purpose of the valuation is to determine the premium payable by the lessee to the freeholder for the purchase of the lease extension.
It is conventional wisdom that a property with more than one hundred years unexpired lease term is worth roughly the same as a freehold. Where an additional ninety years added to any lease with more than 30 years left, the premises will be equivalent in value to a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The conveyancing solicitors that we work with undertake 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 conveyancing solicitor we work with provide it.
Edward owned a conversion flat in Stroud on the market with a lease of a little over fifty eight years remaining. Edward informally spoke with his freeholder a well known London-based freehold company and enquired on a premium to extend the lease. The landlord indicated a willingness to extend the lease to 125 years on the basis of a new rent at the outset set at £200 per annum and doubled every twenty five years thereafter. Ordinarily, ground rent would not be payable on a lease extension were Edward to exercise his statutory right. Edward obtained expert legal guidance and secured satisfactory resolution without going to tribunal and readily saleable.
Mr Edward Davis bought a basement apartment in Stroud in July 2004. The dilemma was if we could approximate the premium would be for a 90 year lease extension. Comparable premises in Stroud with 100 year plus lease were valued about £191,000. The mid-range amount of ground rent was £65 collected every twelve months. The lease finished on 8 November 2083. Taking into account 58 years left we approximated the compensation to the landlord for the lease extension to be between £23,800 and £27,400 exclusive of professional charges.
Mr W Stewart completed a basement flat in Stroud in August 2009. The question was if we could estimate the premium could be for a ninety year extension to my lease. Comparative residencies in Stroud with 100 year plus lease were worth £250,000. The average amount of ground rent was £50 collected yearly. The lease expired in 2094. Considering the 69 years as a residual term we calculated the compensation to the landlord for the lease extension to be between £9,500 and £11,000 not including legals.