Unfortunately that a Washington residential lease is a deteriorating asset. The lease value reduces in proportion to its lease length. The extent of this is not fully appreciated in the first few years due to the loss of value being disguised by increases in the Washington property prices.Once your lease nears 85ish years, you should start thinking about a lease extension. If the number of years remaining drops below 80 years, you will then be required to pay 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 Washington will be able to extend under the legislation; however a lawyer will be able to confirm whether you are eligibility. In some situations you may not qualify. There are also strict timeframes and procedures to follow once the process is instigated and you will need to be guided by your conveyancer throughout the process.
It is conventional wisdom that a residential leasehold with in excess of 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 property will be equivalent in value to a freehold for many years ahead.
| 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. |
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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; |
| Birmingham Midshires | Minimum 70 years from the date 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. |
Retaining our service will provide you enhanced control over the value of your Washington leasehold, as your property will be more valuable and marketable in respect of lease length should you want to sell. The lawyers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Arthur owned a 2 bedroom flat in Washington on the market with a lease of a few days over fifty eight years remaining. Arthur on an informal basis contacted his landlord a well known Manchester-based freehold company and enquired on a premium to extend the lease. The landlord indicated a willingness to grant an extension taking the lease to 125 years on the basis of a rise in the rent to £200 annually. Ordinarily, ground rent would not be due on a lease extension were Arthur to exercise his statutory right. Arthur obtained expert advice and was able to make an informed judgement and deal with the matter and ending up with a market value flat.
Last Summer we were contacted by Dr H Martinez , who moved into a garden apartment in Washington in July 2012. We are asked if we could estimate the premium would be to extend the lease by a further 90 years. Identical residencies in Washington with an extended lease were worth £275,000. The mid-range amount of ground rent was £65 collected quarterly. The lease came to a finish on 5 April 2093. Given that there were 68 years unexpired we estimated the premium to the freeholder to extend the lease to be within £12,400 and £14,200 not including professional charges.
Mr R Walker took over the lease of a one bedroom apartment in Washington in April 2004. We are asked if we could estimate the price would likely be for a ninety year lease extension. Identical residencies in Washington with 100 year plus lease were worth £208,600. The average ground rent payable was £60 invoiced every twelve months. The lease elapsed on 12 March 2082. Given that there were 57 years remaining we approximated the compensation to the freeholder for the lease extension to be between £30,400 and £35,200 exclusive of costs.