Unfortunately that a Cardigan residential lease is a wasting asset. As the lease term reduces so does the value of the property. The extent of this is not fully appreciated in the first few years due to the depreciation being disguised by increases in the Cardigan property prices.Once your lease nears 85ish years, you should start thinking about a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease slips lower than 80 years - otherwise a higher premium will be due. The majority of leasehold owners in Cardigan will be able to extend under the legislation; however a lawyer should be able to clarify if you are eligibility. In some situations you may not qualify. There are also strict timeframes and procedures to follow once the process is instigated and you will need to be guided by your lawyer for the duration of the formalities.
Leasehold properties in Cardigan with in excess of one hundred years remaining 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 property. In such situations there is often little to be gained by purchasing the reversionary interest unless savings on ground rent and service charges warrant it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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 |
| 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 procure Cardigan 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.
Arthur was the the leasehold proprietor of a high value flat in Cardigan being marketed with a lease of just over fifty eight years outstanding. Arthur informally approached his freeholder a well known Bristol-based freehold company and enquired on a premium to extend the lease. The freeholder was keen to grant an extension on non-statutory terms taking the lease to 125 years on the basis of a new rent to start with set at £200 per annum and doubled every 25 years thereafter. No ground rent would be payable on a lease extension were Arthur to invoke his statutory right. Arthur obtained expert legal guidance and was able to make an informed judgement and deal with the matter and ending up with a market value flat.
Dr G Robinson bought a purpose-built apartment in Cardigan in August 2012. The question was if we could shed any light on how much (approximately) price could be for a 90 year extension to my lease. Identical premises in Cardigan with 100 year plus lease were valued around £227,800. The mid-range ground rent payable was £45 collected quarterly. The lease finished on 20 March 2089. Considering the 65 years as a residual term we approximated the premium to the freeholder to extend the lease to be between £13,300 and £15,400 exclusive of fees.
In 2012 we were called by Ms Isabella Taylor who, having moved into a purpose-built flat in Cardigan in August 1996. The question was if we could estimate the compensation to the landlord would likely be to prolong the lease by a further 90 years. Identical residencies in Cardigan with a long lease were in the region of £270,000. The average amount of ground rent was £55 invoiced yearly. The lease end date was on 21 July 2099. Given that there were 75 years remaining we estimated the compensation to the landlord to extend the lease to be between £9,500 and £11,000 plus fees.