When it comes to residential leasehold property in The Borough, you are in fact renting it for a certain amount of time. Modern flat leases typically tend to be for 99 years or 125. Even though this may appear like a long period of time, you may consider a lease extension sooner as opposed to later. Accepted thinking is that the shorter the lease is the cost of extending the lease becomes disproportionately greater particularly when there are less than 80 years remaining. Leasehold owners in The Borough with a lease nearing 81 years unexpired should seriously think of extending it sooner than later. Once the lease term has below 80 years outstanding, under the current Act the landlord can calculate and demand a larger premium, based on a technical calculation, known as “marriage value” which is due.
Leasehold residencies in The Borough with more than one hundred years unexpired on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such situations there is often little upside in purchasing the freehold unless savings on ground rent and estate charges justify it.
| 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. |
| 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. |
| 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. |
| 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 conveyancing solicitor and surveyor with experience in lease extensions.
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 Winter Aiden, came very close to the 80-year threshold with the lease on his basement apartment in The Borough. Having bought his flat 18 years previously, the length of the lease was of no significance. Fortunately, he became aware that he needed to take action soon on Extending the lease. Aiden extended the lease just under the wire in September. Aiden and the freeholder via the management company eventually agreed on an amount of £5,500 . If he not met the deadline, the figure would have become more costly by a minimum £900.
Ms C Patel took over the lease of a recently refurbished apartment in The Borough in August 1998. We are asked if we could estimate the premium would likely be to prolong the lease by ninety years. Comparative properties in The Borough with a long lease were worth £193,400. The average amount of ground rent was £65 invoiced per annum. The lease concluded on 26 November 2084. Given that there were 59 years unexpired we approximated the compensation to the freeholder to extend the lease to be between £21,900 and £25,200 plus professional charges.
Last month we were e-mailed by Mr C Taylor , who owned a garden apartment in The Borough in February 2003. The dilemma was if we could shed any light on how much (approximately) compensation to the landlord would be to extend the lease by ninety years. Similar premises in The Borough with an extended lease were valued around £255,000. The mid-range ground rent payable was £50 billed yearly. The lease concluded in 2095. Given that there were 70 years as a residual term we approximated the premium to the landlord to extend the lease to be within £9,500 and £11,000 not including costs.