The value of Kings Heath leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The cost of extending the lease can increase substantially once the remaining term is less than eighty years
It is generally considered that a property with more than 100 years unexpired lease term is worth roughly the same as a freehold. Where an further ninety years added to all but the shortest lease, the residence will be equivalent in value to a freehold for many years in the future.
| 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. |
| 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; |
| 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. |
| 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. |
Retaining our service will provide you enhanced control over the value of your Kings Heath leasehold, as your property will be more valuable and saleable in terms of lease length should you wish to sell. The conveyancers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Off the back of unsuccessful negotiations with the landlord of her basement apartment in Kings Heath, Natasha initiated the lease extension process as the 80 year mark was fast approaching. The transaction completed in June 2006. The landlord’s fees were negotiated to under four hundred GBP.
Last Spring we were phoned by Mr and Mrs. S Green , who moved into a one bedroom flat in Kings Heath in July 2000. The question was if we could approximate the premium would be to prolong the lease by 90 years. Similar flats in Kings Heath with a long lease were valued about £280,000. The average ground rent payable was £45 billed annually. The lease ran out on 25 June 2095. Taking into account 70 years outstanding we approximated the compensation to the freeholder for the lease extension to be between £12,400 and £14,200 exclusive of fees.
In 2010 we were called by Dr C Petit who, having completed a one bedroom apartment in Kings Heath in March 2002. The dilemma was if we could shed any light on how much (roughly) price could be to extend the lease by a further 90 years. Identical properties in Kings Heath with an extended lease were worth £223,400. The average ground rent payable was £60 billed quarterly. The lease expired on 2 January 2084. Having 59 years left we calculated the compensation to the freeholder for the lease extension to be between £27,600 and £31,800 plus legals.