Trefnant residential property held on a long lease is a depreciating asset because a leaseholder only owns the property for a period of years.
It is conventional wisdom that a property with more than one hundred years remaining is worth approximately the equivalent as a freehold. Where an additional 90 years added to any lease with more than 35 years left, the premises will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage should be declined (see exception below). Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office. Leases with fewer than 70 years should only be referred to the issuing office where the following scenario applies, as discretion may be applied subject to bank approval: • Property is located in any of the following prestigious developments: Cadogan, Crown, Grosvenor, Howard de Walden, Portman or Wellcome Trust Estates in Central London AND • The value of the property subject to the short remaining term is £500,000 or more AND • The loan to value does not exceed 90% for purchases, 90% like for like re-mortgages, 80% for re-mortgages with any element of capital raising and 80% for existing Barclays mortgage borrowers applying for additional borrowing; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Engaging our service will provide you better control over the value of your Trefnant leasehold, as your property will be more valuable and marketable in terms of lease length should you wish to sell. The conveyancing solicitors that we work with have a in-depth market knowledge handling many hundreds of lease extensions or freehold purchase transactions.
Alexander was the the leasehold owner of a conversion flat in Trefnant being marketed with a lease of just over 59 years unexpired. Alexander informally contacted his freeholder a well known Manchester-based freehold company and enquired on a premium to extend the lease. The landlord was keen to give an extension on non-statutory terms taking the lease to 125 years subject to a new rent initially set at £150 per annum and increase every 25 years thereafter. Ordinarily, ground rent would not be payable on a lease extension were Alexander to invoke his statutory right. Alexander procured expert advice and secured satisfactory resolution without going to tribunal and ending up with a market value flat.
In 2013 we were contacted by Mr and Mrs. W Jackson who, having owned a first floor flat in Trefnant in August 1999. The dilemma was if we could shed any light on how much (roughly) premium would be for a ninety year extension to my lease. Comparative properties in Trefnant with 100 year plus lease were worth £280,000. The mid-range ground rent payable was £55 billed yearly. The lease terminated in 2103. Having 78 years as a residual term we approximated the premium to the landlord to extend the lease to be within £13,300 and £15,400 not including costs.
Last Autumn we were called by Dr N Dupont , who owned a studio apartment in Trefnant in July 1996. The question was if we could approximate the compensation to the landlord would be to extend the lease by an additional years. Comparable premises in Trefnant with a long lease were in the region of £186,000. The mid-range ground rent payable was £65 collected per annum. The lease ran out in 2083. Taking into account 58 years remaining we estimated the premium to the freeholder for the lease extension to be within £24,700 and £28,600 exclusive of fees.