It’s a harsh certainty that a Wool residential lease is a deteriorating asset. As the lease term reduces so does the value of the property. The extent of this is not fully appreciated in the first few years due to the deflation being disguised by increases in the Wool property prices.Once your lease nears 85ish years, you need to start thinking about 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 slips below 80 years - otherwise a higher amount will be due. The majority of flat owners in Wool will be able to extend under the legislation; however a lawyer will be able to confirm whether you qualify for an extension. In some cases you may not be entitled. There are also strict timetables and procedures to follow once the process has commenced and you will need to be guided by your lawyer from beginning to end of the formalities.
It is generally considered that a residential leasehold with over 100 years remaining is worth approximately the equivalent as a freehold. Where an additional ninety years added to all but the shortest lease, the premises will be worth the same as a freehold for many years in the future.
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 30 years plus the term of the mortgage at the outset 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 |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Irrespective of whether you are a tenant or a freeholder in Wool,the lease extension solicitors that we work with will always be prepared to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Wool valuers.
Milo was the the leasehold owner of a studio apartment in Wool being sold with a lease of fraction over 72 years remaining. Milo informally spoke with his landlord being a well known local-based freehold company and enquired on a premium to extend the lease. The freeholder was keen to grant an extension on non-statutory terms taking the lease to 125 years subject to an increased rent to £50 yearly. Ordinarily, ground rent would not be due on a lease extension were Milo to invoke his statutory right. Milo obtained expert legal guidance and secured satisfactory deal without going to tribunal and sell the flat.
Mr and Mrs. B Nguyen moved into a first floor apartment in Wool in January 2008. The question was if we could approximate the premium could be for a 90 year extension to my lease. Identical properties in Wool with an extended lease were worth £183,600. The average amount of ground rent was £65 collected monthly. The lease terminated in 2083. Taking into account 57 years left we estimated the compensation to the freeholder to extend the lease to be between £28,500 and £33,000 exclusive of expenses.
Mr Seth Vincent completed a garden apartment in Wool in October 2006. We are asked if we could approximate the compensation to the landlord could be to extend the lease by 90 years. Similar premises in Wool with an extended lease were in the region of £245,000. The mid-range ground rent payable was £50 collected every twelve months. The lease ended in 2094. Taking into account 68 years outstanding we calculated the premium to the freeholder for the lease extension to be between £9,500 and £11,000 not including legals.