With a residential leasehold property in March, you are actually buying an entitlement to reside in a property for a set period of time. These days flat leases typically tend to be for 99 years or 125. Even though this may appear like a lengthy period of time, you should think about extending the lease sooner rather than later. Accepted thinking is that the shorter the number of years is the cost of extending the lease gets disproportionately more expensive particularly when there are fewer than eighty years remaining. Residents in March with a lease approaching 81 years unexpired should seriously think of extending it without delay. Once the lease term has below 80 years remaining, under the relevant statute the landlord is entitled to calculate and demand a larger premium, based on a technical calculation, known as “marriage value” which is due.
Leasehold residencies in March with over one hundred years unexpired on the lease are often regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such circumstances there is often little upside in buying the reversionary interest unless savings on ground rent and estate charges warrant it.
| Lender | Requirement |
|---|---|
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Coventry Building Society | 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must also be not less than 75 years at the outset of the mortgage. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
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 wish 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.
Charlie was the the leasehold proprietor of a studio apartment in March being sold with a lease of a few days over fifty eight years outstanding. Charlie informally approached his landlord being a well known Bristol-based freehold company and enquired on a premium to extend the lease. The freeholder indicated a willingness to grant an extension taking the lease to 125 years subject to a new rent at the outset set at £200 per annum and doubled every twenty five years thereafter. No ground rent would be due on a lease extension were Charlie to invoke his statutory right. Charlie obtained expert legal guidance and secured an acceptable resolution without going to tribunal and sell the flat.
Last Christmas we were approach by Mr and Mrs. H Allen , who owned a basement flat in March in October 1998. The question was if we could shed any light on how much (roughly) compensation to the landlord would be to prolong the lease by a further 90 years. Identical properties in March with a long lease were worth £250,400. The mid-range ground rent payable was £65 collected every twelve months. The lease expired in 2089. Taking into account 64 years as a residual term we calculated the compensation to the freeholder for the lease extension to be within £19,000 and £22,000 not including costs.
Ms Georgia Wright moved into a one bedroom apartment in March in April 2011. The question was if we could shed any light on how much (roughly) premium would be for a ninety year extension to my lease. Comparative premises in March with a long lease were valued around £189,000. The mid-range amount of ground rent was £55 collected monthly. The lease ended in 2078. Having 53 years left we estimated the premium to the landlord for the lease extension to be between £28,500 and £33,000 plus costs.