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Top reasons for Wickford lease extension


Top reasons for lease extension now:

A Wickford lease depreciates with the years remaining on the lease.

Unfortunately that a Wickford residential lease is a wasting 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 Wickford property prices.Once your lease gets to 85ish years, you should start considering a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease dips below 80 years - otherwise a higher premium will be due. The majority of leasehold owners in Wickford will be able to extend under the legislation; however a conveyancer will be able to clarify whether you are eligibility. In some situations you may not qualify. There are also strict timetables and procedures to follow once the process is instigated and you will need to be guided by your conveyancer from beginning to end of the process.

An extended lease has roughly the same value as a freehold

Leasehold properties in Wickford with more than one hundred years left on the lease are often 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 buying the freehold unless savings on ground rent and maintenance charges warrant it.

Lenders will not loan monies on a short lease

Mortgage companies do not like short residential leases. You are likely to encounter problems if you wish to sell your flat in Wickford if the remaining term of your lease is under the criteria set by most mortgage companies. Different lenders have varying criteria but generally they are looking for a minimum remaining lease term of 65 years.

Lender Requirement
Bank of Scotland Minimum 70 years from the date of the mortgage.
Birmingham Midshires Minimum 70 years from the date of the mortgage.
Leeds Building Society 85 years remaing from the start of the mortgage.
The Mortgage Works Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:

Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer

New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer

Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.

SECOND HAND PROPERTIES

Unacceptable - advise Originations (Will be declined):
- Unexpired lease term less than 70 years
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period less than or equal to 5 years

Refer to Originations (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 0.5% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Originations):
- Unexpired lease term greater than 85 years
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI

NEW BUILD PROPERTIES (includes office conversions)

Unacceptable - advise Originations (Will be declined):
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house
- Starting Ground Rent greater than 0.1% of the property value
- Ground Rent review period less than or equal to 5 years
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI

Refer to Originations (Valuer will consider any impact on valuation figure and marketability):
- Ground Rent is linked to any indices greater than RPI
- Ground Rent is linked to the value of the building*
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 0.5% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Originations):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- Starting Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than 5 years
- Ground Rent escalation less than or equal to RPI

* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years
Yorkshire Building Society 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.

Get in touch with one of our Wickford lease extension solicitors or enfranchisement solicitors

The conveyancers that we work with undertake Wickford 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 conveyancing solicitor we work with provide it.

Wickford Lease Extension Example Cases:

Jason, Wickford, Essex

In recent months Jason, came dangerously close to the eighty-year threshold with the lease on his two bedroom flat in Wickford. In buying his home two decades ago, the unexpired term was of minimal interest. by good luck, he realised he would imminently be paying way over the odds for Extending the lease. Jason was able to extend his lease just in the nick of time in September. Jason and the freeholder ultimately agreed on the final figure of £6,000 . If the lease had gone below 80 years, the premium would have increased by a minimum £1,075.

Wickford case:

Mr and Mrs. M Brooks acquired a newly refurbished apartment in Wickford in October 1999. The question was if we could estimate the compensation to the landlord would likely be to extend the lease by ninety years. Comparative premises in Wickford with 100 year plus lease were in the region of £216,000. The average amount of ground rent was £60 billed annually. The lease ended on 20 October 2079. Taking into account 58 years remaining we approximated the premium to the freeholder to extend the lease to be between £28,500 and £33,000 not including expenses.

Wickford case:

Dr C Cooper was assigned a lease of a ground floor apartment in Wickford in January 1999. We are asked if we could estimate the compensation to the landlord could be to prolong the lease by ninety years. Identical premises in Wickford with a long lease were in the region of £205,000. The mid-range amount of ground rent was £50 collected monthly. The lease lapsed on 1 September 2099. Considering the 78 years outstanding we estimated the premium to the landlord to extend the lease to be between £8,600 and £9,800 not including professional charges.