Owning a flat usually means owning a lease of the property, this is a ‘time-limited’ interest becoming shorter every day. The lease will ordinarily be granted for a set period of time , ordinarily 99 or 125 years, although we have witnessed longer and shorter terms in Valley. Inevitably, the length of lease left reduces as time goes by. This is often overlooked and only becomes a problem when the residence needs to be disposed of or refinanced. The shorter the lease the less it is worth and the more it will cost to extend the lease. Eligible leaseholders in Valley have the right to extend the lease for a further 90 years under Leasehold Reform legislation. Please give due consideration before delaying your Valley lease extension. Putting off the cost now likely increases the price you will ultimately incur for a lease extension
Leasehold properties in Valley with over one hundred years outstanding 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 home. In such circumstances there is often little upside in buying the reversionary interest unless savings on ground rent and service charges merit 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. |
| 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| 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. |
Retaining our service will provide you enhanced control over the value of your Valley leasehold, as your property will be more valuable and saleable in respect of lease length should you decide 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.
After unsuccessful discussions with the landlord of her basement flat in Valley, Samantha initiated the lease extension process just as her lease was coming close to the crucial 80-year threshold. The legal work was finalised in February 2011. The freeholder’s costs were restricted to below 650 pounds.
In 2013 we were called by Dr Amy Clark who, having bought a garden apartment in Valley in March 2009. The dilemma was if we could estimate the price would likely be to prolong the lease by 90 years. Identical homes in Valley with an extended lease were worth £265,000. The average amount of ground rent was £50 collected quarterly. The lease elapsed in 2098. Taking into account 73 years remaining we calculated the premium to the freeholder for the lease extension to be within £9,500 and £11,000 not including legals.
Dr Sophia Moore bought a ground floor flat in Valley in April 2003. The question was if we could approximate the premium could be for a 90 year extension to my lease. Similar properties in Valley with a long lease were worth £264,000. The mid-range amount of ground rent was £60 collected quarterly. The lease expired on 15 March 2078. Taking into account 53 years unexpired we calculated the premium to the freeholder for the lease extension to be within £37,100 and £42,800 not including expenses.