Townhill leases on domestic properties are gradually losing value. if your lease has in the region of ninety years remaining, you should start thinking about a lease extension. It is important to recognise that it is that it is financially advisable for your lease extension to take place before the term of the current lease falls below eighty years - otherwise a higher premium will be due. Flat owners in Townhill will mostly qualify for a lease extension; however It would be wise to check with a conveyancing solicitor to check if you qualify. In certain circumstances you may not be entitled. There are prescribed timetables and steps to comply with once the process has started so it’s prudent to be guided by a conveyancer during the process.
Leasehold properties in Townhill with over one hundred years unexpired on the lease are often regarded as a ‘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 reversionary interest unless savings on ground rent and maintenance 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. |
| The Mortgage Works | Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term. Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed: Second hand property: - If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years - if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported - For equity share applications - advise us if the actual lease term is different than reported on the offer New build property: - If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house) - For equity share applications - always advise us if the actual lease term is different than reported on the offer Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below. SECOND HAND PROPERTIES Unacceptable - advise Issuing Office (Will be declined): - Unexpired lease term less than 70 years - Less than 30 years remaining at the end of the mortgage term - Ground Rent greater than 0.5% of the property value - Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more - Ground Rent is compounded RPI - Ground Rent review period less than or equal to 5 years Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability): - Unexpired lease term is 70 to 85 years - Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value - Ground Rent escalation is linked to any indices greater than RPI - Ground Rent escalation is linked to the value of the building* - Ground Rent review period is greater than 5 and less than 10 years - Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc - Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover) - Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover) - Anything that appears onerous, unusual or out of the ordinary Acceptable (no requirement to advise Issuing Office): - Unexpired lease term greater than 85 years - Ground Rent less than or equal to 0.1% of the property value - Ground Rent review period greater than or equal to 10 years - Ground Rent escalation less than or equal to RPI NEW BUILD PROPERTIES (includes office conversions) Unacceptable - advise Issuing Office (will be declined): - Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house - Any lease which is subject to a ground rent (or annual rent) being charged which is more than on a peppercorn basis - Any lease which is subject to a ground rent (or annual rent) being reviewed and altered on any review basis or methodology Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability): - Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc - Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover) - Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover) - Anything else appears onerous, unusual or out of the ordinary Acceptable (no requirement to advise Issuing Office): - Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house - A lease subject to a peppercorn ground rent (annual rent) charges For the avoidance of doubt, any new build properties completed but not sold pre 30 June 2022 will only be acceptable if the lease conforms to the above guidance * Where the Ground Rent escalation is linked to the value of the building, please provide the following: - How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property? - The current valuation and Ground Rent for each unit - What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned? - What is the right of appeal? And is this a documented process within the lease? - Who bears the cost of the valuation (and appeal) process? - Confirmation the review period is not less than twenty years LEASE EXTENSIONS We require all lease extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where you become aware that it does not meet these requirements, please refer to the Issuing Office Please ensure that all lender enquiries are submitted (with full documentation/requirements) at least 2 weeks prior to exchange to allow sufficient time for review and decisioning. |
Irrespective of whether you are a tenant or a freeholder in Townhill,the lease extension solicitors that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Townhill valuers.
Finn owned a high value flat in Townhill on the market with a lease of just over 61 years remaining. Finn informally approached his freeholder a well known local-based freehold company for a lease extension. The landlord indicated a willingness to grant an extension taking the lease to 125 years on the basis of a new rent initially set at £200 per annum and doubled every 25 years thereafter. No ground rent would be due on a lease extension were Finn to invoke his statutory right. Finn obtained expert advice and secured satisfactory resolution without resorting to tribunal and readily saleable.
In 2012 we were phoned by Mrs T Baker who, having moved into a basement apartment in Townhill in January 2007. We are asked if we could shed any light on how much (approximately) compensation to the landlord could be to prolong the lease by 90 years. Identical properties in Townhill with 100 year plus lease were valued around £290,000. The mid-range ground rent payable was £45 collected per annum. The lease terminated in 2098. Given that there were 73 years as a residual term we calculated the premium to the landlord to extend the lease to be within £9,500 and £11,000 exclusive of legals.
Mr Eliot Thomas owned a studio apartment in Townhill in June 2001. We are asked if we could approximate the premium could be to prolong the lease by a further 90 years. Comparative residencies in Townhill with a long lease were in the region of £240,600. The mid-range amount of ground rent was £60 collected per annum. The lease ended on 12 June 2087. Given that there were 62 years outstanding we estimated the compensation to the landlord for the lease extension to be within £21,900 and £25,200 not including fees.