Unfortunately that a Handforth 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 early years due to the reduction being disguised by increases in the Handforth property market.Once your lease gets to 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 under 80 years - otherwise a higher premium will be due. Most leasehold owners in Handforth 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 timetables and procedures to follow once the process has commenced and you will need to be guided by your lawyer from beginning to end of the process.
It is conventional wisdom that a property with in excess of 100 years unexpired lease term is worth approximately the same as a freehold. Where an further ninety years added to any lease with more than 35 years left, the property 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. |
| Coventry Building Society | 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. |
| 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 |
| 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 conveyancers that we work with undertake Handforth 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 conveyancing solicitor we work with provide it.
Cameron was the the leasehold owner of a 2 bedroom flat in Handforth being marketed with a lease of a little over 72 years outstanding. Cameron informally contacted his freeholder a well known Manchester-based freehold company for a lease extension. The freeholder indicated a willingness to extend the lease to 125 years subject to an increased rent to £50 annually. Ordinarily, ground rent would not be payable on a lease extension were Cameron to exercise his statutory right. Cameron procured expert advice and secured an acceptable resolution informally and sell the flat.
In 2013 we were contacted by Mr and Mrs. L Allen who, having owned a studio apartment in Handforth in June 2008. The dilemma was if we could estimate the premium would be for a ninety year extension to my lease. Identical residencies in Handforth with an extended lease were worth £181,600. The mid-range ground rent payable was £55 collected annually. The lease lapsed in 2078. Given that there were 52 years outstanding we estimated the compensation to the landlord to extend the lease to be between £30,400 and £35,200 plus costs.
Last October we were phoned by Mr L Thompson , who purchased a one bedroom apartment in Handforth in March 2011. The dilemma was if we could estimate the compensation to the landlord would be for a ninety year lease extension. Identical properties in Handforth with 100 year plus lease were valued about £290,000. The average ground rent payable was £45 invoiced yearly. The lease expiry date was on 19 August 2098. Taking into account 72 years outstanding we calculated the premium to the landlord to extend the lease to be between £11,400 and £13,200 plus expenses.