The value of Wrington leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The cost of extending the lease can increase significantly once the unexpired lease term is less than eighty years
It is conventional wisdom that a property with over 100 years unexpired lease term is worth approximately the same as a freehold. Where an further ninety years added to any lease with more than 45 years remaining, the property will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage should be declined (see exception below). Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office. Leases with fewer than 70 years should only be referred to the issuing office where the following scenario applies, as discretion may be applied subject to bank approval: • Property is located in any of the following prestigious developments: Cadogan, Crown, Grosvenor, Howard de Walden, Portman or Wellcome Trust Estates in Central London AND • The value of the property subject to the short remaining term is £500,000 or more AND • The loan to value does not exceed 90% for purchases, 90% like for like re-mortgages, 80% for re-mortgages with any element of capital raising and 80% for existing Barclays mortgage borrowers applying for additional borrowing; |
| 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. |
| Halifax | 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. |
Using our service will provide you enhanced control over the value of your Wrington leasehold, as your property will be more valuable and marketable in relation to the lease length should you decide to sell. The conveyancing solicitors that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Stanley owned a studio flat in Wrington on the market with a lease of a few days over sixty years left. Stanley on an informal basis approached his freeholder being a well known Bristol-based freehold company and enquired on a premium to extend the lease. The freeholder indicated a willingness to extend the lease to 125 years on the basis of an increased rent to £100 annually. Ordinarily, ground rent would not be payable on a lease extension were Stanley to exercise his statutory right. Stanley obtained expert legal guidance and secured an acceptable resolution without going to tribunal and ending up with a market value flat.
Last Summer we were contacted by Dr Isobel Turner , who acquired a first floor flat in Wrington in May 1996. The dilemma was if we could shed any light on how much (roughly) premium would be for a ninety year lease extension. Identical properties in Wrington with a long lease were in the region of £280,000. The mid-range ground rent payable was £45 invoiced quarterly. The lease finished on 10 November 2096. Considering the 70 years outstanding we approximated the premium to the landlord to extend the lease to be within £12,400 and £14,200 plus expenses.
Last year we were e-mailed by Mr and Mrs. R Phillips , who purchased a basement flat in Wrington in March 1999. We are asked if we could approximate the compensation to the landlord would likely be for a ninety year lease extension. Identical residencies in Wrington with a long lease were in the region of £218,400. The average amount of ground rent was £60 collected yearly. The lease ended on 3 August 2085. Having 59 years remaining we approximated the premium to the freeholder for the lease extension to be within £27,600 and £31,800 not including legals.