When it comes to long leasehold property in Victoria, you are actually buying a right to reside in a property for a prescribed time frame. In recent years flat leases typically tend to be for 99 years or 125. Even though this may appear like a long period of time, you should think about a lease extension sooner rather than later. Accepted thinking is that the shorter the lease is the cost of extending the lease increases markedly notably once there are less than 80 years left. Anyone in Victoria with a lease drawing near to 81 years remaining should seriously think of extending it sooner rather than later. When the lease term has below eighty years remaining, under the relevant legislation the freeholder can calculate and demand a larger amount, based on a technical multiplication, known as “marriage value” which is payable.
It is generally considered that a residential leasehold with more than 100 years unexpired lease term is worth roughly the same as a freehold. Where an additional ninety years added to all but the shortest lease, the residence will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must also be not less than 75 years at the outset of the mortgage. |
| 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. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
| 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 Victoria leasehold, as your property will be more valuable and saleable in relation to the 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.
Trailing unsuccessful discussions with the landlord of her purpose-built flat in Victoria, Melissa started the lease extension process just as her lease was approaching the crucial eighty-year mark. The legal work was finalised in March 2015. The landlord’s costs were kept to an absolute minimum.
In 2009 we were called by Mr B Lee who, having owned a one bedroom flat in Victoria in September 1995. We are asked if we could shed any light on how much (roughly) premium would likely be to extend the lease by 90 years. Identical properties in Victoria with an extended lease were valued about £245,000. The average ground rent payable was £50 invoiced per annum. The lease terminated in 2093. Considering the 68 years outstanding we calculated the premium to the freeholder for the lease extension to be between £9,500 and £11,000 exclusive of legals.
An example of a Lease Extension matter before the tribunal for a Victoria premises is Flats 12A & 19, Evelyn Mansions Carlisle Place in June 2009. The Tribunal held that the price to be paid for the new lease of Flat 12A is £168,824, For the other flat the price was set at £169,110 This case related to 2 flats. The unexpired term as at the valuation date was 56 years.