The re-sale value of a leasehold property in Great Barford is impacted by how many years the lease has remaining. If it is close to or less than 80 years you should envisage problems on re-sale, so it is recommended to arrange for the lease to be extended before buying. It is preferable to start the lease extension process when the lease still has 82 years unexpired so that a lease extension can be finalised ahead of the eighty year cut off point. Statute enables Great Barford qualifying lessees to an additional term of 90 years in addition to the existing term, at a nominal rent (zero ground rent). The purpose of the valuation is to determine the premium payable by the lessee to the freeholder for the acquisition of the lease extension.
It is conventional wisdom that a residential leasehold with in excess of 100 years unexpired lease term is worth roughly the same as a freehold. Where an additional 90 years added to any lease with more than 45 years unexpired, the premises will be worth the same as 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; |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The conveyancers that we work with handle Great Barford 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.
During the course of the last few months William, came precariously close to the 80-year mark with the lease on his studio flat in Great Barford. In buying his property 18 years ago, the length of the lease was of no relevance. Luckily, he realised he needed to take steps soon on a lease extension. William extended the lease just ahead of time in April. William and the landlord ultimately settled on a premium of £5,500 . If the lease had gone below 80 years, the premium would have escalated by at least £875.
In 2010 we were phoned by Ms W Bernard who, having took over the lease of a studio apartment in Great Barford in September 2011. We are asked if we could approximate the compensation to the landlord would be to extend the lease by 90 years. Comparable homes in Great Barford with an extended lease were in the region of £300,000. The mid-range ground rent payable was £50 billed every twelve months. The lease expiry date was in 2100. Having 75 years as a residual term we estimated the compensation to the landlord to extend the lease to be within £9,500 and £11,000 not including expenses.
Last Spring we were contacted by Mr and Mrs. F Johnson , who owned a garden flat in Great Barford in March 2004. The question was if we could shed any light on how much (approximately) price could be to extend the lease by 90 years. Similar flats in Great Barford with a long lease were worth £250,400. The average amount of ground rent was £65 invoiced per annum. The lease elapsed on 18 March 2089. Given that there were 64 years remaining we estimated the premium to the freeholder to extend the lease to be between £19,000 and £22,000 not including costs.