The re-sale value of a leasehold property in Braintree is impacted by how long the lease has remaining. If it is near to or less than eighty years you should expect problems on re-sale, so it is recommended to arrange for the lease to be extended ahead of buying. It is preferable to commence the lease extension process when the lease still has 82 years to run so that formalities can be concluded well before the 80 year cut off point. Leasehold Reform legislation enables Braintree qualifying lessees to acquire a new lease which will be for the balance of the existing lease plus an additional term of 90 years. The intention of the valuation is to determine the amount payable by the lessee to the freeholder for the purchase of the lease extension.
Leasehold properties in Braintree with in excess of one hundred years unexpired on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such situations there is often little upside in buying the freehold unless savings on ground rent and service charges warrant it.
| Lender | Requirement |
|---|---|
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| 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 lawyers that we work with handle Braintree 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.
In 2014 Aiden, came seriously near to the eighty-year mark with the lease on his garden apartment in Braintree. In buying his home two decades ago, the lease term was of little interest. Fortunately, he became aware that he would soon be paying an inflated amount for Extending the lease. Aiden arranged for a lease extension just in the nick of time last July. Aiden and the freeholder eventually settled on a premium of £5,500 . If the lease had descended lower than 80 years, the figure would have gone up by a minimum £1,100.
In 2010 we were called by Mr and Mrs. P Mercier who, having was assigned a lease of a purpose-built apartment in Braintree in May 1996. We are asked if we could approximate the compensation to the landlord would be for a ninety year lease extension. Comparable residencies in Braintree with an extended lease were worth £285,000. The average amount of ground rent was £55 invoiced yearly. The lease ended on 1 February 2104. Having 79 years left we estimated the premium to the freeholder for the lease extension to be between £13,300 and £15,400 not including costs.
In 2013 we were e-mailed by Dr L François who, having was assigned a lease of a basement apartment in Braintree in April 2010. The dilemma was if we could approximate the compensation to the landlord would likely be for a 90 year lease extension. Comparative properties in Braintree with 100 year plus lease were in the region of £193,400. The average amount of ground rent was £65 billed quarterly. The lease end date was on 3 November 2084. Taking into account 59 years as a residual term we estimated the premium to the landlord for the lease extension to be between £21,900 and £25,200 plus legals.