The re-sale value of a leasehold property in Woodbridge is impacted by how long the lease has left to run. If it is near to or fewer than 80 years you should envisage difficulties on re-sale, so it is advisable to arrange for the lease to be extended prior to purchasing. It is preferable to start the lease extension process when a lease still has 82 years to run so that all matters can be finalised well before the eighty year threshold. Statute enables Woodbridge qualifying lessees to obtain a lease extension of 90 years in addition to the remaining lease term at a peppercorn rent (that is, rent free). The purpose of the valuation is to arrive at an opinion of the premium payable by the lessee to the freeholder for the acquisition of the lease extension.
It is conventional wisdom that a residential leasehold with in excess of 100 years remaining is worth approximately the equivalent as a freehold. Where an additional 90 years added to all but the shortest lease, the residence will be equivalent in value to a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date 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. |
| 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 conveyancers that we work with handle Woodbridge 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.
During the course of the last few months Ibrahim, came very close to the 80-year threshold with the lease on his studio flat in Woodbridge. In buying his home 19 years ago, the lease term was of minimal importance. Luckily, he realised he would imminently be paying way over the odds for a lease extension. Ibrahim extended the lease just under the wire last May. Ibrahim and the freeholder via the managing agents ultimately agreed on the final figure of £6,000 . If the lease had descended to less than eighty years, the amount would have become more costly by at least £1,025.
In 2010 we were called by Dr Y Rose who, having purchased a ground floor flat in Woodbridge in February 2007. The dilemma was if we could approximate the premium could be to prolong the lease by an additional years. Comparable flats in Woodbridge with an extended lease were worth £173,800. The mid-range amount of ground rent was £60 billed annually. The lease finished in 2080. Given that there were 55 years left we estimated the premium to the landlord to extend the lease to be within £31,400 and £36,200 not including professional charges.
Mr W King moved into a ground floor flat in Woodbridge in July 2010. We are asked if we could estimate the compensation to the landlord would likely be to prolong the lease by 90 years. Similar premises in Woodbridge with 100 year plus lease were valued around £235,200. The mid-range amount of ground rent was £45 collected monthly. The lease end date was on 16 January 2091. Given that there were 66 years outstanding we calculated the compensation to the landlord to extend the lease to be within £12,400 and £14,200 exclusive of expenses.