Unfortunately that a Victoria residential lease is a deteriorating asset. The lease value reduces in proportion to its lease length. The extent of this is taken for granted in the early years due to the reduction being disguised by increases in the Victoria property prices.Once your lease nears 85ish years, you should start considering a lease extension. If the number of years remaining slips below 80 years, you will end up paying 50% of the property's 'marriage value' on top of the usual cost of the lease extension to the landlord. Marriage value is the amount of extra value that a lease extension will add the property Most flat owners in Victoria will be able to extend under the legislation; however a conveyancing solicitor will be able to confirm if you are eligibility. In some situations you may not qualify. There are also strict timeframes and procedures to be adhered to once the process is instigated and you will need to be guided by your lawyer from beginning to end of the process.
Leasehold properties in Victoria with in excess of one hundred years unexpired on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your property. In such circumstances there is often little to be gained by buying the freehold unless savings on ground rent and estate charges warrant 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; |
| Coventry Building Society | 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Using our service will provide you enhanced control over the value of your Victoria leasehold, as your property will be more valuable and marketable in terms of lease length should you want to sell. The conveyancing solicitors that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Hunter owned a conversion apartment in Victoria on the market with a lease of a few days over 59 years unexpired. Hunter on an informal basis contacted his freeholder being a well known Bristol-based freehold company for a lease extension. The landlord indicated a willingness to grant an extension taking the lease to 125 years on the basis of a new rent at the outset set at £200 per annum and doubled every twenty five years thereafter. Ordinarily, ground rent would not be payable on a lease extension were Hunter to exercise his statutory right. Hunter obtained expert advice and was able to make a more informed decision and handle with the matter and sell the property.
Mr U Gray took over the lease of a one bedroom apartment in Victoria in January 2002. We are asked if we could estimate the price could be for a 90 year lease extension. Comparative premises in Victoria with an extended lease were worth £183,600. The average amount of ground rent was £65 collected annually. The lease ran out in 2082. Given that there were 57 years as a residual term we approximated the premium to the landlord to extend the lease to be between £28,500 and £33,000 plus expenses.
An example of a Lease Extension matter before the tribunal for a Victoria flat 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 affected 2 flats. The unexpired term was 56 years.