Watton leases on residential properties are gradually decreasing in value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of the lease becomes more expensive. It is the case that most Watton tenants have the right to extend their lease by an additional ninety years by virtue of the 1993 Leasehold Reform Act. Where you are a leasehold owner in Watton you would be well advised to check if your lease has between seventy and 90 years remaining. In particular once the remaining lease term slips under 80 years, the cost of any lease extension sharply increases as an element of the premium you will incur is what is known as a marriage value
Leasehold properties in Watton with over 100 years outstanding 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 home. In such circumstances there is often little upside in buying the reversionary interest unless savings on ground rent and service charges merit it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The lawyers that we work with procure Watton lease extensions and help protect your position. A lease extension can be arranged to be completed to coincide with a change of ownership so the costs of the lease extension are paid for using part of the sale proceeds. You really do need expert legal advice in this difficult and technical area of law. The conveyancer we work with provide it.
In 2014 Ben, came precariously near to the 80-year threshold with the lease on his purpose- built flat in Watton. In buying his flat 18 years previously, the lease term was of minimal interest. Luckily, he realised he needed to take action soon on a lease extension. Ben was able to extend his lease just ahead of time last April. Ben and the freeholder subsequently agreed on sum of £6,000 . If the lease had dipped to less than eighty years, the figure would have gone up by at least £1,025.
In 2012 we were phoned by Mr and Mrs. A Nelson who, having bought a purpose-built flat in Watton in August 2001. We are asked if we could shed any light on how much (roughly) compensation to the landlord would be to prolong the lease by an additional years. Similar flats in Watton with an extended lease were valued about £235,600. The average amount of ground rent was £60 invoiced monthly. The lease terminated on 10 January 2088. Having 62 years as a residual term we calculated the premium to the freeholder to extend the lease to be between £21,900 and £25,200 not including costs.
Last Christmas we were contacted by Mr and Mrs. N Bailey , who took over the lease of a first floor apartment in Watton in September 2008. We are asked if we could estimate the compensation to the landlord would be for a ninety year lease extension. Similar homes in Watton with an extended lease were worth £174,200. The average ground rent payable was £55 collected yearly. The lease finished on 27 February 2077. Considering the 51 years outstanding we calculated the compensation to the freeholder for the lease extension to be between £31,400 and £36,200 not including professional charges.