Valley leases on residential properties are gradually diminishing in value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of the lease becomes more expensive. The majority of owners of residential leasehold property in Valley enjoy rights under legislation to extend the terms of their leases. Where you are a leasehold owner in Valley you must investigate if your lease has between 70 and 90 years remaining. In particular once the remaining lease term slips under 80 years, the cost of any lease extension increases dramatically as an element of the premium you pay is what is known as a marriage value
Leasehold properties in Valley with in excess of one hundred years left 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 to be gained by purchasing the reversionary interest unless savings on ground rent and estate charges justify it.
| 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| 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 Valley can be a difficult process. We recommend you procure guidance from a lawyer and valuer well versed in the legislation and lease extension process.
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 a wealth of experience procuring Valley lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.
Two years ago David, started to get close to the 80-year mark with the lease on his one bedroom flat in Valley. In buying his property 19 years ago, the lease term was of minimal relevance. Luckily, he noticed he would soon be paying an inflated amount for a lease extension. David extended the lease just under the wire in May. David and the freeholder ultimately agreed on an amount of £5,500 . If the lease had dropped below 80 years, the sum would have become more costly by a minimum £1,000.
Last Summer we were contacted by Mr and Mrs. U Vincent , who took over the lease of a basement flat in Valley in September 2010. The question was if we could shed any light on how much (roughly) price would be for a 90 year lease extension. Identical premises in Valley with 100 year plus lease were valued around £245,000. The average amount of ground rent was £50 invoiced every twelve months. The lease expiry date was on 21 February 2093. Having 68 years as a residual term we estimated the compensation to the landlord to extend the lease to be between £9,500 and £11,000 exclusive of legals.
Mr and Mrs. M Wilson bought a garden flat in Valley in May 2009. The dilemma was if we could estimate the price would likely be to extend the lease by a further 90 years. Comparative homes in Valley with an extended lease were valued around £285,000. The average ground rent payable was £55 billed yearly. The lease terminated in 2104. Taking into account 79 years outstanding we estimated the premium to the landlord for the lease extension to be between £13,300 and £15,400 exclusive of fees.