Winchelsea Lease Extension - Free Consultation

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Why you should start your Winchelsea lease extension


Main reasons to start your Winchelsea lease extension today:

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

The market value of a leasehold property in Winchelsea is impacted by how many years the lease has remaining. If it is close to or fewer than eighty years you should anticipate difficulties on re-sale, so it is recommended to arrange for the lease to be extended before purchasing. Ideally one should start the lease extension process when a lease still has 82 years unexpired so that a lease extension can be concluded ahead of the eighty year cut off point. Leasehold Reform legislation enables Winchelsea qualifying lessees to acquire a lease extension of 90 years on top of the remaining length of the lease at a peppercorn rent (that is, rent free). The reason of the valuation is to determine the premium payable by the lessee to the freeholder for the acquisition of the lease extension.

An extended lease has roughly the same value as a freehold

It is conventional wisdom that a property with over one hundred years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional 90 years added to all but the shortest lease, the premises will be equivalent in value to a freehold for many years ahead.

Banks and Building Societies will not grant a mortgage on a short lease

Mortgage companies are really restricting their approach as regards to properties in Winchelsea with short leases. For instance you may find that their lending criteria are stricter and that they adjust interest rates depending on how many years are left on the lease. Some may even refuse to lend completely, so where you needed to sell, your remaining options would be to find a cash purchaser, or try your luck at auction thus limiting your market.

Lender Requirement
Bank of Scotland Minimum 70 years from the date of the mortgage.
Halifax Minimum 70 years from the date of the mortgage.
Skipton Building Society 85 years from the date of completion of the mortgage

For Buy to Let cases:
- lettings must not breach any of the lessee’s covenants; and
- consent of the lessor to lettings must be obtained if necessary



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
Royal Bank of Scotland Mortgage term plus 30 years. For a Lifetime Mortgage, the term must be no less than 150 years minus the age of the Borrower.

What makes us experts in Winchelsea lease extensions?

Regardless of whether you are a tenant or a freeholder in Winchelsea,the lease extension lawyers that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Winchelsea valuers.

Winchelsea Lease Extension Example Cases:

Jake, Winchelsea, East Sussex

Last year Jake, came seriously close to the 80-year mark with the lease on his basement flat in Winchelsea. In buying his flat twenty years ago, the unexpired term was of little relevance. Fortunately, it dawned on him that he would imminently be paying an escalated premium for a lease extension. Jake was able to extend his lease just ahead of time in March. Jake and the landlord who owned the flat above eventually agreed on sum of £5,500 . If he not met the deadline, the amount would have increased by a minimum £1,050.

Winchelsea case:

In 2013 we were e-mailed by Dr B Williams who, having was assigned a lease of a one bedroom apartment in Winchelsea in January 2009. The dilemma was if we could shed any light on how much (approximately) price could be for a ninety year extension to my lease. Similar premises in Winchelsea with a long lease were valued about £206,200. The average amount of ground rent was £60 collected annually. The lease elapsed in 2076. Taking into account 56 years outstanding we estimated the compensation to the freeholder to extend the lease to be between £31,400 and £36,200 not including costs.

Winchelsea case:

Last August we were contacted by Dr T Clarke , who owned a basement flat in Winchelsea in June 1995. We are asked if we could shed any light on how much (approximately) compensation to the landlord would be for a 90 year extension to my lease. Identical residencies in Winchelsea with 100 year plus lease were valued around £300,000. The average amount of ground rent was £50 invoiced quarterly. The lease elapsed on 24 August 2096. Having 76 years left we approximated the compensation to the landlord to extend the lease to be between £8,600 and £9,800 not including costs.