Unfortunately that a March residential lease is a deteriorating asset. The lease value reduces in proportion to its lease length. The extent of this is taken for granted in the first few years due to the depreciation being disguised by increases in the March property market.Where your lease has approximately 90 years left, you need to start considering a lease extension. If lease term slips under eighty years, you will end up paying half of the property's 'marriage value' on top of 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 flat owners in March will be able to extend under the legislation; however a conveyancing solicitor should be able to clarify whether you are eligibility. In some cases you may not be entitled. There are also strict deadlines and procedures to be adhered to once the process has commenced and you will need to be guided by your lawyer throughout the formalities.
It is conventional wisdom that a property with in excess of 100 years remaining is worth approximately the equivalent as a freehold. Where an further ninety years added to any lease with more than 45 years left, the premises will be worth the same as a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 75 years plus the term of the mortgage at the outset 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. |
The conveyancing solicitors that we work with procure March 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.
Following protracted discussions with the freeholder of her leasehold apartment in March, Danielle started the lease extension process just as her lease was approaching the crucial eighty-year threshold. The legal work completed in July 2012. The landlord’s charges were kept to an absolute minimum.
Last year we were approach by Mr and Mrs. S López , who owned a one bedroom apartment in March in January 2004. We are asked if we could shed any light on how much (approximately) premium would likely be to extend the lease by an additional years. Similar flats in March with 100 year plus lease were in the region of £233,200. The mid-range ground rent payable was £60 invoiced annually. The lease ran out on 13 May 2087. Taking into account 61 years outstanding we approximated the compensation to the freeholder for the lease extension to be between £22,800 and £26,400 plus professional charges.
Mrs Courtney Brown was assigned a lease of a recently refurbished apartment in March in November 2012. We are asked if we could estimate the premium could be to prolong the lease by ninety years. Similar homes in March with 100 year plus lease were worth £171,800. The average ground rent payable was £55 billed per annum. The lease expired on 13 November 2076. Considering the 50 years unexpired we estimated the compensation to the landlord for the lease extension to be within £33,300 and £38,400 plus legals.