For those whose Borth flat is held on a long lease, our message is clear – if you do nothing, your property will ultimately revert to the freeholder, leaving you empty-handed. The shorter the lease the lower the value of the property and the more it will cost to obtain a lease extension.
It is conventional wisdom that a property with in excess of one hundred years remaining is worth approximately the same as a freehold. Where an further ninety years added to all but the shortest lease, the residence will be equivalent in value to a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| 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. |
| Leeds Building Society | 85 years remaining from the start 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The conveyancing solicitors that we work with handle Borth 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 conveyancer we work with provide it.
Hunter was the the leasehold owner of a studio flat in Borth on the market with a lease of fraction over fifty eight years outstanding. Hunter informally spoke with his freeholder being a well known local-based freehold company for a lease extension. The freeholder was keen to agree an extension on non-statutory terms taking the lease to 125 years on the basis of a new rent at the outset set at £200 per annum and doubled every 25 years thereafter. No ground rent would be due on a lease extension were Hunter to invoke his statutory right. Hunter obtained expert advice and secured satisfactory resolution without resorting to tribunal and readily saleable.
In 2012 we were e-mailed by Mrs J Wright who, having owned a one bedroom flat in Borth in June 2010. The dilemma was if we could shed any light on how much (roughly) compensation to the landlord would be to prolong the lease by an additional years. Identical residencies in Borth with a long lease were valued around £245,000. The average amount of ground rent was £45 invoiced yearly. The lease elapsed in 2092. Considering the 68 years as a residual term we estimated the compensation to the freeholder to extend the lease to be within £9,500 and £11,000 plus legals.
Mrs Shannon Carter completed a garden apartment in Borth in October 2003. We are asked if we could estimate the price could be to prolong the lease by an additional years. Comparable premises in Borth with 100 year plus lease were in the region of £285,000. The average amount of ground rent was £55 collected quarterly. The lease end date was on 7 March 2103. Having 79 years remaining we calculated the premium to the freeholder for the lease extension to be between £13,300 and £15,400 not including expenses.