The value of Hermitage leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The expense of a lease extension can increase substantially once the unexpired lease term is below than 80 years
It is conventional wisdom that a property with more than 100 years remaining is worth approximately the equivalent as a freehold. Where an additional 90 years added to all but the shortest lease, 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. |
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Engaging our service gives you enhanced control over the value of your Hermitage leasehold, as your property will be more valuable and marketable in terms of lease length should you want 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.
Last October Harvey, started to get close to the eighty-year threshold with the lease on his ground floor flat in Hermitage. Having bought his home 18 years previously, the lease term was of minimal bearing. As luck would have it, he realised he needed to take steps soon on Extending the lease. Harvey extended the lease at the eleventh hour last April. Harvey and the landlord ultimately agreed on the final figure of £5,000 . If the lease had fallen lower than eighty years, the price would have escalated by a minimum £975.
In 2013 we were contacted by Mr and Mrs. N Peterson who, having purchased a basement flat in Hermitage in March 1999. The dilemma was if we could approximate the premium could be for a 90 year extension to my lease. Identical homes in Hermitage with an extended lease were valued around £295,000. The mid-range amount of ground rent was £50 billed every twelve months. The lease lapsed on 21 January 2101. Given that there were 75 years unexpired we estimated the premium to the landlord for the lease extension to be within £8,600 and £9,800 exclusive of costs.
Dr Kayleigh Baker completed a ground floor apartment in Hermitage in May 2011. The question was if we could shed any light on how much (approximately) compensation to the landlord would be for a ninety year extension to my lease. Identical premises in Hermitage with a long lease were valued around £250,400. The average amount of ground rent was £65 billed yearly. The lease came to a finish in 2090. Given that there were 64 years remaining we estimated the compensation to the landlord to extend the lease to be between £19,000 and £22,000 not including fees.