For those whose Summertown flat is held on a long lease, the message is clear – if no remedial action is taken, your property will ultimately revert to the freeholder, leaving you empty-handed. The shorter the lease the lower the value of the property and the more expensive it will be to procure a lease extension.
It is conventional wisdom that a residential leasehold with more than 100 years remaining is worth roughly the equivalent as a freehold. Where an further ninety years added to any lease with more than 30 years remaining, the residence will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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. |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 75 years plus the term of the mortgage at the outset of the mortgage. |
The conveyancers that we work with procure Summertown 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.
David owned a conversion flat in Summertown on the market with a lease of a few days over sixty years unexpired. David informally approached his landlord a well known London-based freehold company for a lease extension. The freeholder indicated a willingness to extend the lease to 125 years subject to a new rent at the outset set at £100 per annum and increase every twenty five years thereafter. No ground rent would be payable on a lease extension were David to exercise his statutory right. David obtained expert legal guidance and was able to make a more informed decision and handle with the matter and readily saleable.
Last month we were contacted by Dr Elijah Gunderson , who purchased a studio apartment in Summertown in June 1997. We are asked if we could approximate the premium would likely be to prolong the lease by 90 years. Comparable premises in Summertown with an extended lease were worth £179,200. The mid-range ground rent payable was £55 billed quarterly. The lease expired on 17 July 2077. Taking into account 51 years remaining we calculated the compensation to the freeholder for the lease extension to be between £31,400 and £36,200 plus fees.
In 2010 we were contacted by Mr and Mrs. B Girard who, having took over the lease of a first floor flat in Summertown in April 2004. We are asked if we could estimate the compensation to the landlord could be for a ninety year lease extension. Similar homes in Summertown with 100 year plus lease were worth £285,000. The mid-range ground rent payable was £45 invoiced per annum. The lease ran out on 12 June 2097. Having 71 years remaining we approximated the compensation to the freeholder to extend the lease to be between £12,400 and £14,200 not including fees.