Owning a apartment usually means owning a lease of the property, this is a ‘time-limited’ interest becoming shorter every day. This lease will normally be granted for a fixed period of time , ordinarily 99 or 125 years, although we have witnessed longer and shorter terms in Cotswolds. Clearly, the term of lease remaining reduces as time goes by. This is often overlooked and only becomes a problem when the residence needs to be disposed of or re-mortgaged. The fewer the years remaining the lower the value of the property and the more it will cost to extend the lease. Qualifying long lease owners in Cotswolds have the right to extend the lease for a further 90 years under legislation. Do give due consideration before putting off your Cotswolds lease extension. Holding off the cost now likely increases the price you will ultimately have to pay to extend your lease
It is generally accepted that a property with over 100 years remaining is worth approximately the equivalent as a freehold. Where an further 90 years added to all but the shortest lease, the premises will be worth the same as a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| Birmingham Midshires | Minimum 70 years from the date 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. |
| 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 procure Cotswolds 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 year Ali, started to get close to the eighty-year threshold with the lease on his two bedroom apartment in Cotswolds. Having bought his flat two decades ago, the unexpired term was of no significance. Fortunately, it dawned on him that he needed to take steps soon on Extending the lease. Ali was able to extend his lease just ahead of time in January. Ali and the landlord who owned the flat above eventually settled on sum of £5,000 . If the lease had slipped to less than eighty years, the sum would have become more exhorbitant by a minimum £950.
Dr Hollie King was assigned a lease of a one bedroom flat in Cotswolds in January 1999. We are asked if we could estimate the price would likely be to prolong the lease by 90 years. Comparable premises in Cotswolds with a long lease were in the region of £265,000. The mid-range amount of ground rent was £50 invoiced monthly. The lease came to a finish in 2098. Considering the 73 years remaining we approximated the premium to the freeholder to extend the lease to be between £9,500 and £11,000 not including legals.
In 2012 we were phoned by Mr and Mrs. T Williams who, having acquired a one bedroom apartment in Cotswolds in October 2006. The dilemma was if we could estimate the compensation to the landlord could be for a 90 year lease extension. Similar residencies in Cotswolds with an extended lease were valued about £264,000. The average amount of ground rent was £60 billed per annum. The lease ended in 2078. Taking into account 53 years left we calculated the premium to the landlord to extend the lease to be within £37,100 and £42,800 exclusive of professional charges.