When it comes to domestic leasehold property in Tredegar, you effectively rent it for a certain period of time. Modern flat leases typically tend to be for 99 years or 125. Many leasehold owners become complacent as this seems like a long period of time, you may consider extending the lease sooner rather than later. The general rule is that the shorter the lease is the cost of extending the lease increases markedly notably once there are fewer than eighty years remaining. Residents in Tredegar with a lease nearing 81 years remaining should seriously consider extending it without delay. When the lease term has under 80 years outstanding, under the current statute the landlord can calculate and demand a greater premium, based on a technical computation, known as “marriage value” which is due.
Leasehold properties in Tredegar with in excess of one hundred years remaining on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such situations there is often little upside in buying the reversionary interest unless savings on ground rent and service charges merit it.
| Lender | Requirement |
|---|---|
| Lloyds TSB Scotland | Mortgage term plus 30 years subject to an overall minimum term of 70 years |
| National Westminster Bank | Mortgage term plus 30 years. For a Lifetime Mortgage, the term must be no less than 150 years minus the age of the Borrower. |
| Nationwide Building Society | - Our minimum unexpired lease term is 55 years. - There must be at least 30 years remaining at the end of the mortgage term (regardless of the length of lease at the start). 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 55 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 is 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 55 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 0.5% 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 (does not apply to Shared Ownership) - Starting Ground Rent greater than 0.1% of the property value - Ground Rent review period less than or equal to every 5 years - 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 Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability): - Ground Rent is linked to any indices greater than RPI - Ground Rent is linked to the value of the building* - 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 0.5% 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 - Starting Ground Rent less than or equal to 0.1% of the property value - Ground Rent review period greater than 5 years - Ground Rent escalation less than or equal to RPI * 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. For a Lifetime Mortgage, the term must be no less than 150 years minus the age of the Borrower. |
| 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. |
The conveyancing solicitors that we work with handle Tredegar 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 lawyer we work with provide it.
Last year Lucas, came very near to the 80-year threshold with the lease on his first floor flat in Tredegar. Having purchased his property 18 years ago, the length of the lease was of little concern. Fortunately, he realised he needed to take steps soon on a lease extension. Lucas arranged for a lease extension just under the wire last January. Lucas and the landlord in the end agreed on a premium of £5,000 . If the lease had dipped below 80 years, the price would have become more exhorbitant by at least £1,025.
In 2009 we were approached by Mrs Amber Mason who, having moved into a studio flat in Tredegar in September 1996. The dilemma was if we could approximate the premium could be for a 90 year lease extension. Comparable properties in Tredegar with an extended lease were valued around £280,000. The mid-range ground rent payable was £45 collected every twelve months. The lease finished on 1 January 2091. Considering the 70 years unexpired we estimated the premium to the landlord for the lease extension to be within £12,400 and £14,200 not including expenses.
Dr K Gómez moved into a purpose-built flat in Tredegar in November 2012. The dilemma was if we could estimate the price could be for a 90 year lease extension. Comparative properties in Tredegar with 100 year plus lease were in the region of £223,400. The average ground rent payable was £60 billed monthly. The lease expired in 2080. Having 59 years left we estimated the compensation to the landlord to extend the lease to be within £27,600 and £31,800 exclusive of expenses.