It’s an underpublicised truth that a Swadlincote residential lease is a wasting asset. The lease value reduces in proportion to its lease length. The extent of this is taken for granted in the early years due to the loss of value being disguised by increases in the Swadlincote property market.Where your lease has approximately ninety years left, you need to 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 slips below 80 years - otherwise a higher amount will be due. Most flat owners in Swadlincote will be able to extend under the legislation; however a conveyancer should be able to clarify if you are eligibility. In some cases you may not be entitled. There are also strict deadlines and procedures to follow once the process has commenced and you will need to be guided by your conveyancer from beginning to end of the process.
Leasehold premises in Swadlincote with more than one hundred years outstanding on the lease are often referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your property. In such circumstances there is often little upside in purchasing the freehold unless savings on ground rent and service charges warrant it.
| Lender | Requirement |
|---|---|
| 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; |
| Chelsea Building Society | 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. |
| 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The conveyancers that we work with undertake Swadlincote 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.
In recent months William, started to get close to the 80-year threshold with the lease on his basement flat in Swadlincote. Having purchased his home two decades ago, the lease term was of minimal significance. Luckily, he became aware that he would imminently be paying an inflated amount for a lease extension. William was able to extend his lease just ahead of time in July. William and the landlord who owned the flat above in the end agreed on the final figure of £5,500 . If the lease had dipped below 80 years, the sum would have increased by a minimum £925.
Last Summer we were e-mailed by Ms R Leroy , who moved into a one bedroom apartment in Swadlincote in October 1996. We are asked if we could shed any light on how much (roughly) premium would likely be to prolong the lease by a further 90 years. Comparative flats in Swadlincote with a long lease were valued about £205,000. The average ground rent payable was £50 collected per annum. The lease ended in 2104. Having 79 years as a residual term we approximated the premium to the freeholder to extend the lease to be within £8,600 and £9,800 exclusive of expenses.
Mr and Mrs. G Fournier purchased a basement apartment in Swadlincote in August 2002. The question was if we could approximate the compensation to the landlord could be to extend the lease by 90 years. Similar residencies in Swadlincote with a long lease were in the region of £275,000. The average amount of ground rent was £65 collected per annum. The lease terminated in 2093. Taking into account 68 years remaining we estimated the premium to the freeholder for the lease extension to be between £12,400 and £14,200 not including professional charges.