Mersea Island residential property owned on a long lease is a depreciating asset as the leaseholder merely owns the property for a period of years.
Leasehold premises in Mersea Island with in excess of one hundred years outstanding on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such circumstances there is often little to be gained by buying the reversionary interest unless savings on ground rent and estate 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. |
| 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. |
| 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. |
| Yorkshire 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. |
The conveyancing solicitors that we work with procure Mersea Island 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 lawyer we work with provide it.
In 2014 Finley, came precariously close to the 80-year threshold with the lease on his studio apartment in Mersea Island. In buying his home two decades ago, the lease term was of little bearing. Thankfully, he recognised he needed to take action soon on a lease extension. Finley arranged for a lease extension just under the wire in June. Finley and the freeholder via the managing agents eventually settled on sum of £5,500 . If he had missed the deadline, the figure would have escalated by at least £925.
Ms P Ricardo acquired a ground floor apartment in Mersea Island in February 2010. The question was if we could approximate the premium would be for a ninety year lease extension. Comparable premises in Mersea Island with 100 year plus lease were in the region of £183,600. The mid-range ground rent payable was £65 invoiced monthly. The lease ended in 2082. Given that there were 57 years remaining we approximated the premium to the freeholder to extend the lease to be between £28,500 and £33,000 not including costs.
Last Summer we were called by Dr J Nelson , who bought a purpose-built flat in Mersea Island in November 2003. The question was if we could approximate the compensation to the landlord could be for a ninety year extension to my lease. Comparative flats in Mersea Island with 100 year plus lease were in the region of £245,000. The mid-range amount of ground rent was £50 collected yearly. The lease terminated on 9 May 2093. Taking into account 68 years as a residual term we approximated the compensation to the landlord for the lease extension to be between £9,500 and £11,000 plus professional charges.