The value of Aston leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The expense of a lease extension can increase significantly once the remaining term is below than 80 years
Leasehold properties in Aston with over one hundred years left on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your home. In such circumstances there is often little to be gained by purchasing the reversionary interest unless savings on ground rent and service charges merit it.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
| 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. |
The conveyancing solicitors that we work with handle Aston 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 lawyer we work with provide it.
Oliver owned a 2 bedroom apartment in Aston on the market with a lease of just over sixty years remaining. Oliver informally contacted his landlord being a well known London-based freehold company for a lease extension. The landlord was prepared to agree an extension on non-statutory terms taking the lease to 125 years subject to a new rent at the outset set at £100 per annum and doubled every twenty five years thereafter. Ordinarily, ground rent would not be payable on a lease extension were Oliver to exercise his statutory right. Oliver procured expert advice and was able to make a more informed decision and deal with the matter and readily saleable.
In 2011 we were called by Mr and Mrs. T Moreau who, having moved into a purpose-built apartment in Aston in March 2003. The question was if we could estimate the premium would be to prolong the lease by a further 90 years. Identical premises in Aston with an extended lease were worth £245,000. The average ground rent payable was £45 collected yearly. The lease end date was on 21 April 2094. Having 68 years left we estimated the compensation to the freeholder to extend the lease to be between £9,500 and £11,000 plus expenses.
In 2009 we were phoned by Mr Riley Scott who, having completed a first floor apartment in Aston in September 1998. The question was if we could approximate the compensation to the landlord would be to prolong the lease by 90 years. Similar properties in Aston with an extended lease were valued about £280,000. The mid-range amount of ground rent was £55 invoiced monthly. The lease ended in 2105. Given that there were 79 years unexpired we calculated the premium to the freeholder to extend the lease to be within £13,300 and £15,400 not including legals.