The re-sale value of a leasehold property in Bury is impacted by how long the lease has remaining. If it is close to or fewer than eighty years you should envisage difficulties on re-sale, so it is advisable to arrange for a lease extension prior to purchasing. Ideally one should start the lease extension process when the lease still has 82 years to run so that all matters can be finalised well before the eighty year cut off point. Leasehold Reform legislation enables Bury qualifying lessees to a 90 year extension added to their residual lease term (ie if your lease has fifty years left the statutory lease extension will provide a new term of 140 years). The reason of the valuation is to arrive at an opinion of the amount payable by the lessee to the freeholder for the purchase of the lease extension.
It is generally accepted that a residential leasehold with more than one hundred years remaining is worth approximately the equivalent as a freehold. Where an further ninety years added to all but the shortest lease, the premises will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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; |
| 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The conveyancers that we work with undertake Bury 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.
Last Christmas Harry, came perilously close to the eighty-year threshold with the lease on his studio apartment in Bury. In buying his property two decades ago, the unexpired term was of no concern. Luckily, it dawned on him that he needed to take steps soon on a lease extension. Harry was able to extend his lease at the eleventh hour in September. Harry and the freeholder via the management company in the end agreed on a premium of £5,000 . If the lease had slid to less than 80 years, the price would have increased by a minimum £850.
Dr M Rose was assigned a lease of a recently refurbished flat in Bury in June 2010. We are asked if we could approximate the compensation to the landlord would be to extend the lease by ninety years. Comparative premises in Bury with 100 year plus lease were in the region of £290,000. The mid-range ground rent payable was £45 collected quarterly. The lease terminated on 7 October 2099. Given that there were 74 years as a residual term we approximated the compensation to the landlord to extend the lease to be between £9,500 and £11,000 not including expenses.
In 2010 we were called by Ms Megan Phillips who, having bought a ground floor apartment in Bury in August 1998. The question was if we could approximate the price could be for a 90 year lease extension. Comparable properties in Bury with a long lease were valued about £243,000. The mid-range amount of ground rent was £65 collected per annum. The lease expired on 19 October 2088. Given that there were 63 years unexpired we approximated the premium to the freeholder for the lease extension to be within £20,000 and £23,000 not including expenses.