Montpelier leases on domestic properties are gradually losing value. Where your lease has about 90 years remaining, you should start thinking about a lease extension. It is important to recognise that it is that it is financially advisable for a lease extension to be in place before the term of the existing lease falls below 80 years - otherwise a higher premium will be payable. Leasehold owners in Montpelier will mostly qualify for a lease extension; however a solicitor should be able check your eligibility. In certain situations you may not be entitled. There are also strict timetables and procedures to follow once the process has commenced so it’s sensible to be guided by a conveyancing solicitor during the process.
It is generally accepted that a property with more than 100 years remaining is worth roughly the same as a freehold. Where an additional 90 years added to all but the shortest lease, the property will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| 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. |
Engaging our service will provide you better control over the value of your Montpelier leasehold, as your property will be more valuable and marketable in terms of lease length should you decide to sell. The conveyancing solicitors that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Last year Owen, started to get near to the eighty-year threshold with the lease on his basement apartment in Montpelier. In buying his home 19 years ago, the unexpired term was of little relevance. As luck would have it, it dawned on him that he would soon be paying way over the odds for a lease extension. Owen extended the lease at the eleventh hour in May. Owen and the freeholder via the management company in the end agreed on an amount of £5,500 . If he not met the deadline, the figure would have become more costly by at least £950.
In 2010 we were e-mailed by Mr T Bertrand who, having moved into a garden apartment in Montpelier in September 2003. We are asked if we could estimate the premium would likely be to extend the lease by a further 90 years. Identical premises in Montpelier with an extended lease were valued about £240,600. The mid-range amount of ground rent was £65 invoiced yearly. The lease terminated on 3 November 2088. Considering the 62 years remaining we calculated the compensation to the freeholder for the lease extension to be between £21,900 and £25,200 plus legals.
In 2011 we were called by Dr E Michel who, having purchased a purpose-built apartment in Montpelier in April 2001. The question was if we could approximate the compensation to the landlord could be to prolong the lease by an additional years. Comparative properties in Montpelier with an extended lease were worth £179,200. The mid-range ground rent payable was £55 collected quarterly. The lease termination date was in 2077. Taking into account 51 years remaining we approximated the premium to the freeholder for the lease extension to be between £31,400 and £36,200 exclusive of fees.