With a long leasehold premises in March, you are actually purchasing an entitlement to reside in a property for a prescribed time frame. Modern flat leases are usually granted for 99 years or 125. Many leasehold owners are unconcerned as this seems like a lengthy period of time, you should consider a lease extension sooner rather than later. Accepted thinking is that the shorter the lease is the cost of extending the lease increases markedly especially when there are fewer than 80 years remaining. Anyone in March with a lease nearing 81 years remaining should seriously think of extending it as soon as possible. When a lease has below 80 years left, under the relevant Act the landlord can calculate and levy a larger amount, based on a technical multiplication, strangely termed as “marriage value” which is payable.
Leasehold premises in March with more than 100 years unexpired on the lease are often regarded as a ‘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 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. |
| 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. |
| Halifax | Minimum 70 years from the date 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 |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
The lawyers that we work with handle 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 conveyancer we work with provide it.
16 months ago Ollie, came dangerously near to the eighty-year threshold with the lease on his one bedroom apartment in March. Having bought his home two decades ago, the unexpired term was of no relevance. As luck would have it, he noticed he needed to take steps soon on a lease extension. Ollie was able to extend his lease at the eleventh hour last July. Ollie and the freeholder via the management company ultimately agreed on an amount of £6,000 . If he failed to meet the deadline, the price would have increased by at least £1,050.
Dr Arthur Turner was assigned a lease of a garden flat in March in April 2002. The dilemma was if we could shed any light on how much (roughly) premium could be for a 90 year lease extension. Comparable premises in March with a long lease were in the region of £300,000. The average ground rent payable was £50 collected quarterly. The lease ended in 2102. Having 76 years outstanding we calculated the compensation to the freeholder to extend the lease to be within £8,600 and £9,800 not including fees.
Last Winter we were approach by Mr and Mrs. C Wright , who acquired a garden apartment in March in July 2009. The question was if we could approximate the compensation to the landlord would likely be for a ninety year extension to my lease. Identical residencies in March with a long lease were in the region of £257,800. The average amount of ground rent was £65 billed annually. The lease ended in 2091. Having 65 years as a residual term we calculated the compensation to the landlord to extend the lease to be within £18,100 and £20,800 not including professional charges.