It’s an underpublicised certainty that a Summerhill residential lease is a wasting asset. As the lease term diminishes so does the value of the property. The extent of this is taken for granted in the early years due to the depreciation being disguised by increases in the Summerhill property market.Once your lease nears 85ish years, you should 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 falls below eighty years - otherwise a higher premium will be due. The majority of flat owners in Summerhill will be able to extend under the legislation; however a conveyancer should be able to clarify if you qualify for an extension. In some situations you may not qualify. 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 for the duration of the process.
It is generally accepted that a residential leasehold with more than 100 years remaining is worth roughly the same as a freehold. Where an additional 90 years added to all but the shortest lease, the residence will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
The conveyancers that we work with procure Summerhill 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.
Mason owned a studio flat in Summerhill being sold with a lease of fraction over 72 years remaining. Mason informally spoke with his landlord a well known London-based freehold company and enquired on a premium to extend the lease. The landlord indicated a willingness to grant an extension taking the lease to 125 years subject to a new rent to start with set at £200 per annum and increase every twenty five years thereafter. Ordinarily, ground rent would not be due on a lease extension were Mason to invoke his statutory right. Mason procured expert advice and secured satisfactory resolution without going to tribunal and ending up with a market value flat.
In 2013 we were called by Mr and Mrs. I Stewart who, having purchased a studio apartment in Summerhill in March 1998. The dilemma was if we could shed any light on how much (roughly) premium would be to extend the lease by ninety years. Comparable premises in Summerhill with 100 year plus lease were valued about £189,000. The mid-range ground rent payable was £55 invoiced per annum. The lease terminated in 2079. Having 53 years unexpired we estimated the premium to the freeholder to extend the lease to be within £28,500 and £33,000 not including fees.
Dr Henry Rivera was assigned a lease of a ground floor apartment in Summerhill in May 2006. The dilemma was if we could approximate the price could be to extend the lease by 90 years. Identical premises in Summerhill with 100 year plus lease were valued around £290,000. The average ground rent payable was £45 billed yearly. The lease finished in 2099. Given that there were 73 years remaining we approximated the premium to the landlord for the lease extension to be between £8,600 and £9,800 exclusive of expenses.