Wool leases on residential properties are gradually diminishing in value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of your lease gets more expensive. It is the case that most Wool tenants have the right to extend their lease by an additional ninety years by virtue of the 1993 Leasehold Reform Act. Where you are a leasehold owner in Wool you would be well advised to check if your lease has between seventy and ninety years remaining. There are good reasons why a Wool flat owner with a lease having around eighty years left should take action to ensure that a lease extension is actioned without delay
It is generally accepted that a property with over one hundred years remaining is worth approximately the equivalent as a freehold. Where an further 90 years added to all but the shortest lease, the premises will be equivalent in value to a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Chelsea 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. |
| 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. |
| 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Engaging our service will provide you increased control over the value of your Wool leasehold, as your property will be more valuable and marketable in relation to the lease length should you want to sell. The lawyers that we work with have a in-depth market knowledge handling many hundreds of lease extensions or freehold purchase transactions.
Lewis was the the leasehold proprietor of a 2 bedroom flat in Wool being marketed with a lease of a little over fifty eight years outstanding. Lewis on an informal basis contacted his freeholder being a well known London-based freehold company and enquired on a premium to extend the lease. The landlord indicated a willingness to grant an extension taking the lease to 125 years on the basis of a new rent to start with set at £100 per annum and increase every twenty five years thereafter. Ordinarily, ground rent would not be payable on a lease extension were Lewis to invoke his statutory right. Lewis obtained expert legal guidance and secured an acceptable resolution informally and sell the property.
Ms R Martínez moved into a purpose-built flat in Wool in March 2001. The question was if we could shed any light on how much (approximately) compensation to the landlord would be for a ninety year extension to my lease. Comparable residencies in Wool with 100 year plus lease were worth £261,600. The average ground rent payable was £60 collected quarterly. The lease lapsed in 2078. Taking into account 52 years left we estimated the compensation to the landlord for the lease extension to be within £39,000 and £45,000 exclusive of legals.
Mrs Poppy White purchased a studio flat in Wool in April 1995. We are asked if we could approximate the price would likely be to extend the lease by ninety years. Comparable properties in Wool with 100 year plus lease were valued about £218,000. The average ground rent payable was £45 invoiced every twelve months. The lease ended on 14 January 2089. Considering the 63 years as a residual term we calculated the premium to the freeholder to extend the lease to be within £17,100 and £19,800 not including costs.