The value of Bury leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The expense of extending the lease can escalate significantly once the remaining term is less than eighty years
It is generally considered that a residential leasehold with over one hundred years unexpired lease term is worth roughly the equivalent as a freehold. Where an additional 90 years added to any lease with more than 35 years remaining, 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Coventry Building Society | 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. |
| 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. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
Using our service gives you increased control over the value of your Bury leasehold, as your property will be more valuable and marketable in respect of lease length should you want to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
During the course of the last few months Archie, started to get near to the 80-year mark with the lease on his leasehold flat in Bury. Having purchased his property two decades ago, the lease term was of no relevance. by good luck, he recognised he needed to take steps soon on a lease extension. Archie was able to extend his lease at the eleventh hour in July. Archie and the landlord subsequently settled on an amount of £5,000 . If the lease had slid to less than eighty years, the premium would have escalated by at least £925.
Last Autumn we were approach by Mr Jonathan Lewis , who completed a one bedroom flat in Bury in July 2006. We are asked if we could estimate the price would likely be for a ninety year extension to my lease. Identical properties in Bury with a long lease were in the region of £198,800. The average ground rent payable was £55 collected per annum. The lease ran out on 11 March 2081. Having 55 years remaining we approximated the compensation to the freeholder for the lease extension to be within £33,300 and £38,400 plus professional charges.
Last Spring we were called by Mr and Mrs. P Rogers , who bought a recently refurbished apartment in Bury in January 1996. The question was if we could approximate the premium would be for a ninety year extension to my lease. Identical residencies in Bury with 100 year plus lease were in the region of £295,000. The mid-range amount of ground rent was £45 billed monthly. The lease finished on 24 January 2101. Taking into account 75 years outstanding we calculated the compensation to the landlord for the lease extension to be within £8,600 and £9,800 not including legals.