Summerhill leases on residential properties are gradually losing value. Where your lease has in the region of 90 years remaining, you should start considering the need for a lease extension. An important point to note is that it is desirable for your lease extension to take place before the term of the current lease drops lower than eighty years - otherwise a higher premium will be due. Leasehold owners in Summerhill will usually qualify for a lease extension; however It would be wise to check with a conveyancer to check if you qualify. In certain situations you may not qualify. There are also strict deadlines and formalities to comply with once the process has started so it’s sensible to be guided by a conveyancing solicitor during the process.
It is conventional wisdom that a property with in excess of one hundred years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional ninety years added to any lease with more than 30 years unexpired, the residence will be equivalent in value to a freehold for decades to come.
| 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; |
| Godiva Mortgages | 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The conveyancing solicitors that we work with undertake 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.
Benjamin owned a high value flat in Summerhill on the market with a lease of a few days over 61 years left. Benjamin on an informal basis contacted his freeholder being a well known Manchester-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 initially set at £150 per annum and doubled every 25 years thereafter. Ordinarily, ground rent would not be payable on a lease extension were Benjamin to exercise his statutory right. Benjamin obtained expert advice and was able to make a more informed judgement and deal with the matter and ending up with a market value flat.
Mr Felix White was assigned a lease of a purpose-built flat in Summerhill in November 2003. We are asked if we could shed any light on how much (approximately) price could be to extend the lease by an additional years. Similar properties in Summerhill with a long lease were valued about £225,800. The mid-range amount of ground rent was £60 invoiced yearly. The lease lapsed in 2086. Given that there were 60 years outstanding we estimated the premium to the landlord for the lease extension to be within £24,700 and £28,600 not including expenses.
Mr Owen Baker owned a basement apartment in Summerhill in January 2011. We are asked if we could approximate the compensation to the landlord would likely be to prolong the lease by ninety years. Identical homes in Summerhill with an extended lease were valued about £210,000. The average amount of ground rent was £50 collected annually. The lease ran out on 4 July 2106. Having 80 years remaining we estimated the premium to the freeholder to extend the lease to be within £8,600 and £9,800 not including fees.