It’s a harsh certainty that a Yarm residential lease is a wasting asset. The lease value reduces in proportion to its lease length. The extent of this is not fully appreciated in the first few years due to the reduction being disguised by increases in the Yarm property prices.Once your lease gets to 85ish years, you need to start thinking about a lease extension. If lease term falls under eighty years, you will then be required to pay 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. The marriage fee is the amount of extra value that a lease extension will add the property Most flat owners in Yarm will be able to extend under the legislation; however a lawyer should be able to confirm if you are eligibility. In some situations you may not be entitled. There are also strict deadlines and procedures to follow once the process has commenced and you will need to be guided by your conveyancer for the duration of the formalities.
It is generally considered that a property with more than 100 years remaining is worth approximately the equivalent as a freehold. Where an additional 90 years added to all but the shortest lease, the property will be equivalent in value to a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Birmingham Midshires | 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Yorkshire 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. |
Engaging our service will provide you better control over the value of your Yarm leasehold, as your property will be more valuable and saleable in respect of 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.
In recent months Riley, started to get close to the eighty-year threshold with the lease on his ground floor flat in Yarm. Having purchased his flat twenty years ago, the lease term was of little concern. As luck would have it, he became aware that he needed to take action soon on Extending the lease. Riley was able to extend his lease just under the wire in May. Riley and the freeholder via the management company eventually agreed on the final figure of £6,000 . If the lease had gone below eighty years, the figure would have increased by at least £950.
Mrs V Parker bought a one bedroom flat in Yarm in April 2012. The question was if we could estimate the compensation to the landlord would likely be for a 90 year lease extension. Similar premises in Yarm with 100 year plus lease were worth £198,800. The average amount of ground rent was £55 collected quarterly. The lease elapsed on 5 March 2081. Taking into account 55 years remaining we estimated the premium to the landlord to extend the lease to be between £33,300 and £38,400 not including fees.
Ms Mollie Clark acquired a basement apartment in Yarm in March 2012. We are asked if we could shed any light on how much (approximately) compensation to the landlord could be for a 90 year lease extension. Comparable residencies in Yarm with 100 year plus lease were valued around £300,000. The average ground rent payable was £50 collected per annum. The lease terminated on 1 March 2101. Taking into account 75 years remaining we calculated the premium to the landlord to extend the lease to be within £9,500 and £11,000 exclusive of legals.