Unfortunately that a Wool residential lease is a wasting asset. The lease value reduces in proportion to its lease length. The extent of this is taken for granted in the first few years due to the deflation being disguised by increases in the Wool property prices.Where your lease has approximately ninety years left, you should start considering a lease extension. If the number of years remaining dips below 80 years, you will end up paying 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of additional value that a lease extension will add the property Most leasehold owners in Wool will be able to extend under the legislation; however a lawyer should be able to clarify if you are eligibility. In some situations you may not be entitled. There are also strict deadlines and procedures to be adhered to once the process is initiated and you will need to be guided by your conveyancing solicitor from beginning to end of the process.
Leasehold premises in Wool with over 100 years outstanding on the lease are often regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such circumstances there is often little upside in buying the freehold unless savings on ground rent and estate charges justify it.
| 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. |
| Godiva Mortgages | 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. |
The conveyancing solicitors that we work with handle Wool 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.
Muhammad owned a high value flat in Wool on the market with a lease of fraction over sixty years left. Muhammad informally spoke with his freeholder being a well known local-based freehold company for a lease extension. The freeholder indicated a willingness to extend the lease to 125 years on the basis of a new rent at the outset set at £150 per annum and doubled every 25 years thereafter. No ground rent would be payable on a lease extension were Muhammad to invoke his statutory right. Muhammad obtained expert advice and was able to make a more informed decision and deal with the matter and ending up with a market value flat.
Mrs V Ward was assigned a lease of a studio apartment in Wool in January 2000. We are asked if we could approximate the premium could be for a ninety year lease extension. Identical homes in Wool with a long lease were valued around £246,800. The average amount of ground rent was £60 collected yearly. The lease finished in 2076. Given that there were 50 years unexpired we estimated the premium to the landlord for the lease extension to be between £44,700 and £51,600 plus professional charges.
In 2013 we were approached by Mrs R Cooper who, having purchased a garden flat in Wool in May 2002. The question was if we could shed any light on how much (roughly) premium could be for a ninety year lease extension. Comparative properties in Wool with a long lease were valued around £208,200. The average ground rent payable was £65 collected annually. The lease elapsed on 21 July 2087. Having 61 years unexpired we approximated the premium to the landlord to extend the lease to be within £20,000 and £23,000 not including legals.