Unfortunately that a Durham residential lease is a wasting asset. As the lease term diminishes so does the value of the property. The extent of this is not fully appreciated in the first few years due to the deflation being disguised by increases in the Durham property market.Where your lease has approximately 90 years left, you need to 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 falls below 80 years - otherwise a higher premium will be due. The majority of leasehold owners in Durham will be able to extend under the legislation; however a conveyancer 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 has commenced and you will need to be guided by your conveyancer for the duration of the process.
Leasehold properties in Durham with over one hundred years outstanding 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 buying the freehold unless savings on ground rent and maintenance charges warrant it.
| Lender | Requirement |
|---|---|
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Godiva Mortgages | 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. |
| 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 lawyers that we work with procure Durham 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.
Off the back of lengthy discussions with the landlord of her first floor flat in Durham, Daisy commenced the lease extension process just as the lease was coming close to the critical eighty-year mark. The transaction was finalised in October 2011. The landlord’s charges were restricted to below 700 pounds.
Last Spring we were phoned by Mr and Mrs. V Davis , who acquired a recently refurbished flat in Durham in October 2010. The dilemma was if we could estimate the compensation to the landlord would likely be for a 90 year lease extension. Comparative homes in Durham with 100 year plus lease were in the region of £218,000. The average ground rent payable was £45 billed annually. The lease came to a finish on 10 April 2089. Given that there were 63 years left we approximated the premium to the freeholder for the lease extension to be between £17,100 and £19,800 plus costs.
Dr M Morgan owned a garden flat in Durham in May 2000. We are asked if we could estimate the compensation to the landlord would likely be to extend the lease by 90 years. Comparative flats in Durham with 100 year plus lease were in the region of £270,000. The mid-range amount of ground rent was £55 collected every twelve months. The lease expired in 2100. Considering the 74 years unexpired we calculated the compensation to the freeholder for the lease extension to be between £9,500 and £11,000 exclusive of costs.