It’s a harsh truth that a The Park residential lease is a wasting asset. As the lease term diminishes so does the value of the property. The extent of this is not fully appreciated in the first few years due to the loss of value being disguised by increases in the The Park property market.Once your lease gets to 85ish years, you need to start considering a lease extension. If lease term dips below eighty years, you will then be required to pay 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. The marriage fee is the amount of additional value that a lease extension will add the property The majority of flat owners in The Park will be able to extend under the legislation; however a conveyancer will be able to confirm if you are eligibility. In some situations you may not qualify. There are also strict deadlines and procedures to follow once the process is instigated and you will need to be guided by your conveyancer throughout the formalities.
Leasehold properties in The Park with over one hundred years unexpired 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 buying the reversionary interest unless savings on ground rent and estate charges warrant 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. |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
| 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 Park can be a difficult process. We recommend you procure guidance from a lawyer and valuer 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 in-depth market knowledge procuring The Park lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.
During the course of the last few months Eli, started to get near to the 80-year mark with the lease on his two bedroom flat in The Park. In buying his property two decades ago, the lease term was of no interest. Luckily, it dawned on him that he needed to take action soon on a lease extension. Eli extended the lease at the eleventh hour last April. Eli and the landlord subsequently agreed on an amount of £5,500 . If the lease had gone below eighty years, the sum would have gone up by at least £1,000.
Last Spring we were e-mailed by Dr Emily Lewis , who bought a one bedroom flat in The Park in August 2009. We are asked if we could shed any light on how much (approximately) compensation to the landlord would be for a ninety year extension to my lease. Comparative homes in The Park with an extended lease were worth £300,000. The average ground rent payable was £50 invoiced annually. The lease came to a finish on 5 August 2101. Considering the 76 years outstanding we calculated the compensation to the freeholder for the lease extension to be within £8,600 and £9,800 exclusive of professional charges.
In 2011 we were contacted by Ms N Bennett who, having was assigned a lease of a studio flat in The Park in April 1997. The dilemma was if we could approximate the price could be to extend the lease by an additional years. Comparative flats in The Park with a long lease were worth £257,800. The mid-range amount of ground rent was £65 billed per annum. The lease ran out in 2090. Considering the 65 years unexpired we estimated the premium to the freeholder for the lease extension to be between £18,100 and £20,800 exclusive of costs.