With a domestic leasehold premises in The Borough, you are in fact renting it for a certain amount of time. These days flat leases are usually granted for 99 years or 125. Even though this may appear like a long period of time, you should think about a lease extension sooner as opposed to later. The general rule is that the shorter the number of years is the cost of extending the lease gets disproportionately greater especially when there are less than 80 years left. Anyone in The Borough with a lease nearing 81 years unexpired should seriously consider extending it as soon as possible. When the lease term has below 80 years outstanding, under the relevant Act the freeholder can calculate and demand a larger premium, assessed on a technical computation, known as “marriage value” which is due.
It is generally considered that a residential leasehold with in excess of one hundred years remaining is worth roughly the equivalent as a freehold. Where an additional ninety years added to any lease with more than 45 years remaining, the property will be worth the same as 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must also be not less than 75 years at the outset of the mortgage. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| Yorkshire 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. |
Lease extensions in The Borough can be a difficult process. We recommend you obtain guidance from a lawyer and surveyor with experience in this area.
We provide you with an expert from a selection of lease extension solicitors, which ensures a targeted and efficient service as you have a dedicated port of call with an individual lawyer. Our lease extension solicitors have a wealth of experience dealing with The Borough lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.
Last October Riley, started to get near to the 80-year threshold with the lease on his studio flat in The Borough. In buying his property 18 years previously, the unexpired term was of no interest. As luck would have it, he became aware that he needed to take steps soon on Extending the lease. Riley extended the lease just ahead of time last July. Riley and the freeholder via the management company ultimately settled on the final figure of £5,500 . If the lease had fallen to less than eighty years, the price would have increased by a minimum £1,075.
Mr and Mrs. H Nguyen purchased a studio flat in The Borough in November 2006. The dilemma was if we could approximate the compensation to the landlord could be for a ninety year lease extension. Comparable homes in The Borough with an extended lease were worth £280,000. The mid-range amount of ground rent was £55 invoiced yearly. The lease terminated on 3 August 2103. Considering the 78 years as a residual term we calculated the premium to the freeholder for the lease extension to be between £13,300 and £15,400 plus costs.
In 2011 we were phoned by Ms C Sharif who, having purchased a purpose-built apartment in The Borough in January 2005. The question was if we could estimate the premium could be to extend the lease by ninety years. Identical properties in The Borough with an extended lease were in the region of £186,000. The mid-range amount of ground rent was £65 billed quarterly. The lease ran out on 19 April 2083. Considering the 58 years outstanding we approximated the premium to the landlord for the lease extension to be between £24,700 and £28,600 not including professional charges.