The Borough leases on residential deteriorating in value. if your lease has in the region of 90 years unexpired, you should start considering the need for a lease extension. An important point to note is that it is desirable for a lease extension to be in place before the term of the existing lease dips below 80 years - otherwise a higher premium will be due. Flat owners in The Borough will usually be legally entitled to a lease extension; however a solicitor will check your eligibility. In certain cases you may not be entitled. There are prescribed timetables and procedures to comply with once the process is initiated so it’s sensible to be guided by a lawyer during the process.
Leasehold premises in The Borough with more than one hundred years left 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 to be gained by buying the freehold unless savings on ground rent and maintenance charges justify it.
| Lender | Requirement |
|---|---|
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
| Leeds Building Society | 85 years remaining from the start 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The lawyers that we work with undertake The Borough 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.
Subsequent to unsuccessful negotiations with the landlord of her ground floor apartment in The Borough, Jasmine commenced the lease extension process just as the lease was approaching the critical eighty-year mark. The transaction completed in January 2014. The freeholder’s fees were restricted to a tad over 600 GBP.
In 2010 we were e-mailed by Mr O Martin who, having bought a ground floor flat in The Borough in August 2008. We are asked if we could approximate the price could be for a ninety year extension to my lease. Comparable premises in The Borough with 100 year plus lease were worth £166,400. The average ground rent payable was £60 collected quarterly. The lease elapsed on 22 September 2080. Taking into account 54 years remaining we calculated the compensation to the freeholder to extend the lease to be within £32,300 and £37,400 exclusive of legals.
Last Spring we were phoned by Dr Blake Pérez , who bought a purpose-built apartment in The Borough in October 2009. The question was if we could shed any light on how much (roughly) premium could be for a 90 year extension to my lease. Identical homes in The Borough with 100 year plus lease were valued about £227,800. The average ground rent payable was £45 collected per annum. The lease elapsed on 10 August 2091. Having 65 years outstanding we calculated the premium to the landlord for the lease extension to be within £13,300 and £15,400 exclusive of costs.