March residential property held on a long lease is a wasting asset as the leaseholder merely owns the property for a set term.
Leasehold properties in March with over 100 years outstanding on the lease are often regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such circumstances there is often little upside in buying the freehold unless savings on ground rent and service charges justify it.
| 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. |
| 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Retaining our service gives you better control over the value of your March leasehold, as your property will be more valuable and saleable in respect of lease length should you decide to sell. The conveyancers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
George owned a 2 bedroom flat in March on the market with a lease of fraction over 61 years unexpired. George informally contacted his freeholder being a well known Bristol-based freehold company and enquired on a premium to extend the lease. The freeholder was keen to agree an extension on non-statutory terms taking the lease to 125 years on the basis of a new rent to start with set at £200 per annum and doubled every twenty five years thereafter. Ordinarily, ground rent would not be due on a lease extension were George to invoke his statutory right. George procured expert advice and secured satisfactory resolution informally and readily saleable.
Last Christmas we were approach by Ms P Rogers , who took over the lease of a first floor flat in March in July 2004. We are asked if we could approximate the price would be to extend the lease by an additional years. Similar residencies in March with a long lease were worth £257,800. The average amount of ground rent was £65 invoiced annually. The lease came to a finish in 2091. Taking into account 65 years as a residual term we calculated the premium to the landlord to extend the lease to be between £18,100 and £20,800 not including costs.
In 2012 we were e-mailed by Mrs F Collins who, having bought a one bedroom apartment in March in October 2000. The dilemma was if we could approximate the premium would be to extend the lease by ninety years. Comparable premises in March with 100 year plus lease were in the region of £191,400. The average ground rent payable was £55 invoiced every twelve months. The lease expiry date was in 2080. Considering the 54 years outstanding we calculated the premium to the freeholder for the lease extension to be between £34,200 and £39,600 not including legals.