Unfortunately that a Dunmow residential lease is a deteriorating asset. The lease value drops in proportion to its lease length. The extent of this is taken for granted in the early years due to the deflation being disguised by increases in the Dunmow property market.Where your lease has approximately ninety years left, you should start considering 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 falls under 80 years - otherwise a higher premium will be payable. Most leasehold owners in Dunmow will be able to extend under the legislation; however a lawyer should be able to confirm if you qualify for an extension. In some cases you may not be entitled. There are also strict deadlines and procedures to follow once the process has commenced and you will need to be guided by your lawyer throughout the formalities.
It is conventional wisdom that a residential leasehold with over 100 years remaining is worth approximately the equivalent as a freehold. Where an additional ninety years added to any lease with more than 30 years unexpired, the residence will be equivalent in value to 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; |
| Chelsea 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. |
| 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. |
The conveyancers that we work with undertake Dunmow 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.
Muhammad owned a studio apartment in Dunmow on the market with a lease of just over 72 years remaining. Muhammad on an informal basis approached his landlord being a well known Bristol-based freehold company and enquired on a premium to extend the lease. The landlord was prepared to give an extension on non-statutory terms taking the lease to 125 years on the basis of an increased rent to £125 per annum. Ordinarily, ground rent would not be payable on a lease extension were Muhammad to exercise his statutory right. Muhammad procured expert advice and was able to make an informed decision and handle with the matter and sell the property.
Dr V García completed a recently refurbished apartment in Dunmow in February 2010. We are asked if we could estimate the compensation to the landlord would be for a 90 year extension to my lease. Comparative homes in Dunmow with a long lease were in the region of £300,000. The average amount of ground rent was £50 billed monthly. The lease terminated in 2101. Considering the 76 years remaining we approximated the premium to the freeholder to extend the lease to be between £8,600 and £9,800 plus costs.
In 2011 we were approached by Dr Leah García who, having acquired a recently refurbished apartment in Dunmow in May 1998. We are asked if we could shed any light on how much (roughly) compensation to the landlord would likely be for a 90 year extension to my lease. Comparable homes in Dunmow with 100 year plus lease were valued around £257,800. The average ground rent payable was £65 invoiced every twelve months. The lease concluded in 2090. Taking into account 65 years unexpired we estimated the compensation to the freeholder to extend the lease to be between £18,100 and £20,800 plus professional charges.