For anyone whose Wroughton flat is held on a long lease, the message is clear – if no remedial action is taken, the property will ultimately revert to the freeholder, leaving you empty-handed. The shorter the lease the less it is worth and the more expensive it will be to procure a lease extension.
Leasehold premises in Wroughton with over 100 years remaining on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such circumstances there is often little upside in purchasing the freehold unless savings on ground rent and estate charges warrant it.
| 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; |
| Birmingham Midshires | Minimum 70 years from the date 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. |
The conveyancers that we work with procure Wroughton 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.
After unsuccessful discussions with the landlord of her purpose-built apartment in Wroughton, Emma initiated the lease extension process as the 80 year threshold was fast approaching. The transaction was concluded in February 2014. The landlord’s charges were restricted to less than 550 pounds.
Last Winter we were e-mailed by Mr and Mrs. T Kelly , who completed a purpose-built flat in Wroughton in June 2002. The dilemma was if we could estimate the price would be to extend the lease by a further 90 years. Similar premises in Wroughton with an extended lease were valued around £260,000. The average ground rent payable was £50 invoiced monthly. The lease finished in 2097. Taking into account 72 years outstanding we approximated the premium to the freeholder for the lease extension to be within £9,500 and £11,000 exclusive of costs.
In 2009 we were approached by Ms Shannon Hernández who, having purchased a newly refurbished apartment in Wroughton in April 2007. We are asked if we could approximate the compensation to the landlord could be for a ninety year extension to my lease. Comparable properties in Wroughton with 100 year plus lease were worth £256,600. The average amount of ground rent was £60 billed quarterly. The lease expired in 2077. Given that there were 52 years unexpired we calculated the premium to the freeholder to extend the lease to be between £39,000 and £45,000 exclusive of professional charges.