It’s a harsh truth that a Hermitage residential lease is a deteriorating asset. The lease value reduces in proportion to its lease length. The extent of this is not fully appreciated in the early years due to the loss of value being disguised by increases in the Hermitage property prices.Once your lease gets to 85ish years, you should start thinking about a lease extension. If lease term dips below eighty years, you will then be required to pay 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. The marriage fee is the amount of additional value that a lease extension will add the property Most leasehold owners in Hermitage will be able to extend under the legislation; however a conveyancing solicitor will be able to clarify if you qualify for an extension. In some cases you may not be entitled. There are also strict deadlines and procedures to be adhered to once the process is instigated and you will need to be guided by your conveyancing solicitor throughout the process.
Leasehold residencies in Hermitage with in excess of one hundred years left on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such circumstances there is often little upside in purchasing the reversionary interest unless savings on ground rent and maintenance charges warrant it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Using 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 conveyancers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
After lengthy negotiations with the landlord of her leasehold apartment in Hermitage, Bethany commenced the lease extension process just as her lease was approaching the critical eighty-year threshold. The legal work was concluded in March 2008. The freeholder’s charges were restricted to about 700 pounds.
In 2012 we were called by Dr N Lambert who, having was assigned a lease of a first floor apartment in Hermitage in July 2010. The question was if we could shed any light on how much (roughly) price would likely be to prolong the lease by an additional years. Similar flats in Hermitage with an extended lease were valued about £174,200. The mid-range ground rent payable was £55 collected yearly. The lease concluded on 3 January 2076. Given that there were 51 years as a residual term we calculated the compensation to the landlord for the lease extension to be between £31,400 and £36,200 plus legals.
In 2010 we were called by Mr and Mrs. P Mercier who, having purchased a one bedroom apartment in Hermitage in August 2012. The dilemma was if we could estimate the premium could be to extend the lease by an additional years. Identical properties in Hermitage with a long lease were worth £285,000. The mid-range ground rent payable was £45 collected quarterly. The lease lapsed on 21 June 2096. Considering the 71 years unexpired we approximated the premium to the freeholder to extend the lease to be within £12,400 and £14,200 exclusive of expenses.