Watnall leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of the lease becomes more expensive. Legislation has been in place for sometime now allowing qualifying Watnall residential leaseholders to extend the terms of long leases. Where you are a leasehold owner in Watnall you should investigate if your lease has between seventy and ninety years remaining. There are good reasons why a Watnall flat owner with a lease having around eighty years unexpired should take action to ensure that a lease extension is put in place without delay
Leasehold residencies in Watnall with over one hundred years left on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such situations there is often little upside in buying the reversionary interest unless savings on ground rent and maintenance charges warrant it.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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. |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 75 years plus the term of the mortgage at the outset of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
Retaining our service will provide you increased control over the value of your Watnall leasehold, as your property will be more valuable and saleable in relation to the lease length should you want to sell. The conveyancing solicitors that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
During the course of the last few months Luke, came critically close to the 80-year threshold with the lease on his one bedroom flat in Watnall. In buying his property 19 years previously, the unexpired term was of little concern. by good luck, he realised he needed to take steps soon on a lease extension. Luke was able to extend his lease just under the wire in June. Luke and the landlord eventually settled on an amount of £5,000 . If the lease had dipped below 80 years, the figure would have increased by at least £1,025.
In 2012 we were contacted by Mr and Mrs. U Young who, having completed a garden flat in Watnall in June 2008. The dilemma was if we could approximate the premium could be to extend the lease by 90 years. Identical homes in Watnall with an extended lease were valued around £200,800. The average amount of ground rent was £65 invoiced monthly. The lease terminated on 12 August 2086. Taking into account 60 years outstanding we calculated the compensation to the landlord for the lease extension to be between £20,900 and £24,200 plus costs.
In 2009 we were phoned by Dr Aiden Smith who, having moved into a garden flat in Watnall in July 2000. The dilemma was if we could approximate the compensation to the landlord could be to extend the lease by 90 years. Similar homes in Watnall with a long lease were valued around £260,000. The average ground rent payable was £50 invoiced per annum. The lease end date was in 2097. Considering the 71 years remaining we approximated the premium to the freeholder for the lease extension to be within £9,500 and £11,000 exclusive of professional charges.