Wick 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. It is the case that most Wick tenants have the right to extend their lease by an additional 90 years by virtue of the 1993 Leasehold Reform Act. If you are a leasehold owner in Wick you would be well advised to see if your lease has between 70 and 90 years remaining. There are good reasons why a Wick flat owner with a lease having around 80 years remaining should take steps to ensure that a lease extension is effected without delay
Leasehold properties in Wick with in excess of 100 years left on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such situations there is often little upside in purchasing the reversionary interest unless savings on ground rent and service charges merit it.
| 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. |
| 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. |
| Leeds Building Society | 85 years remaining from the start 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. |
The conveyancers that we work with undertake Wick 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 lawyer we work with provide it.
William owned a 2 bedroom flat in Wick on the market with a lease of a few days over fifty eight years left. William informally approached his landlord being 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 £125 yearly. Ordinarily, ground rent would not be payable on a lease extension were William to exercise his statutory right. William procured expert legal guidance and was able to make an informed judgement and deal with the matter and sell the flat.
Last Summer we were contacted by Mr B García , who was assigned a lease of a one bedroom apartment in Wick in February 1998. We are asked if we could approximate the compensation to the landlord would likely be for a ninety year lease extension. Similar homes in Wick with 100 year plus lease were valued about £275,000. The average ground rent payable was £65 collected yearly. The lease elapsed on 21 January 2094. Considering the 68 years outstanding we estimated the premium to the landlord to extend the lease to be within £12,400 and £14,200 exclusive of fees.
Last Autumn we were phoned by Mr Ethan Parker , who was assigned a lease of a recently refurbished apartment in Wick in June 2008. We are asked if we could approximate the compensation to the landlord would likely be to prolong the lease by ninety years. Comparative flats in Wick with an extended lease were in the region of £208,600. The average amount of ground rent was £60 collected yearly. The lease finished in 2083. Considering the 57 years outstanding we approximated the compensation to the freeholder for the lease extension to be within £30,400 and £35,200 exclusive of fees.