Heath leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of your lease becomes more expensive. The majority of owners of residential leasehold property in Heath enjoy rights under legislation to extend the terms of their leases. Where you are a leasehold owner in Heath you must see if your lease has between 70 and 90 years left. In particular once the remaining lease term slips under eighty years, the premium due on any lease extension increases dramatically as an element of the premium you will incur is what is known as a marriage value
It is generally accepted that a residential leasehold with over 100 years remaining is worth roughly the same as a freehold. Where an additional 90 years added to all but the shortest lease, the premises will be worth the same as a freehold for decades to come.
| 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. |
| 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; |
| 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 |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| 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. |
Retaining our service gives you enhanced control over the value of your Heath leasehold, as your property will be more valuable and saleable in respect of lease length should you decide to sell. The conveyancing solicitors that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Rory was the the leasehold owner of a conversion flat in Heath being marketed with a lease of a few days over sixty years remaining. Rory informally contacted his landlord being a well known London-based freehold company and enquired on a premium to extend the lease. The freeholder indicated a willingness to grant an extension taking the lease to 125 years subject to a rise in the rent to £50 per annum. No ground rent would be due on a lease extension were Rory to exercise his statutory right. Rory procured expert advice and secured an acceptable deal without going to tribunal and sell the flat.
Last Summer we were phoned by Dr Elizabeth Kelly , who owned a first floor apartment in Heath in June 1995. We are asked if we could approximate the price would likely be for a ninety year extension to my lease. Comparable flats in Heath with an extended lease were valued about £260,200. The mid-range amount of ground rent was £65 billed yearly. The lease expiry date was on 16 September 2090. Considering the 66 years outstanding we calculated the compensation to the landlord to extend the lease to be within £16,200 and £18,600 plus fees.
In 2009 we were approached by Mr and Mrs. C Jackson who, having was assigned a lease of a recently refurbished apartment in Heath in July 1999. We are asked if we could estimate the compensation to the landlord could be to prolong the lease by an additional years. Comparative flats in Heath with 100 year plus lease were valued about £198,800. The average ground rent payable was £55 billed every twelve months. The lease elapsed in 2079. Taking into account 55 years outstanding we approximated the compensation to the freeholder to extend the lease to be between £33,300 and £38,400 plus fees.