For anyone whose Summertown property is held on a long lease, our message is clear – if you do nothing, your property will ultimately revert to the freeholder, leaving you empty-handed. The fewer the years remaining the less it is worth and the more it will cost to extend the lease.
It is generally accepted that a property with in excess of one hundred years unexpired lease term is worth roughly the equivalent as a freehold. Where an further ninety years added to any lease with more than 45 years left, the property will be equivalent in value to a freehold for many years in the future.
| 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. |
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
Using our service gives you enhanced control over the value of your Summertown leasehold, as your property will be more valuable and marketable in terms of lease length should you wish to sell. The lawyers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
In recent months Hunter, came very near to the eighty-year mark with the lease on his purpose- built flat in Summertown. In buying his flat 19 years ago, the unexpired term was of no importance. Thankfully, he realised he needed to take steps soon on Extending the lease. Hunter extended the lease just in the nick of time last April. Hunter and the freeholder via the management company ultimately settled on an amount of £6,000 . If the lease had slid lower than 80 years, the amount would have become more costly by at least £1,000.
Last month we were e-mailed by Ms Natasha Mitchell , who took over the lease of a one bedroom flat in Summertown in June 1995. We are asked if we could estimate the price would be to prolong the lease by an additional years. Similar residencies in Summertown with a long lease were worth £216,000. The average ground rent payable was £60 collected every twelve months. The lease ended in 2083. Given that there were 58 years unexpired we estimated the premium to the landlord for the lease extension to be within £28,500 and £33,000 exclusive of fees.
Last Autumn we were contacted by Ms Jessica Lewis , who owned a recently refurbished flat in Summertown in February 2008. The question was if we could shed any light on how much (roughly) compensation to the landlord would likely be to prolong the lease by ninety years. Similar homes in Summertown with an extended lease were valued around £205,000. The mid-range ground rent payable was £50 invoiced every twelve months. The lease came to a finish on 2 April 2103. Considering the 78 years remaining we calculated the premium to the freeholder to extend the lease to be between £7,600 and £8,800 not including legals.