It’s a harsh certainty that a Montpelier residential lease is a wasting asset. As the lease term reduces so does the value of the property. The extent of this is not fully appreciated in the first few years due to the depreciation being disguised by increases in the Montpelier property market.Where your lease has approximately ninety years left, you should start thinking about a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease slips lower than 80 years - otherwise a higher amount will be payable. Most leasehold owners in Montpelier will be able to extend under the legislation; however a lawyer should be able to clarify if you are eligibility. In some situations you may not qualify. There are also strict timeframes and procedures to be adhered to once the process has commenced and you will need to be guided by your lawyer throughout the formalities.
It is generally considered that a residential leasehold with over one hundred years remaining is worth approximately the same as a freehold. Where an further ninety years added to any lease with more than 35 years remaining, the property will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| 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. |
| 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. |
Regardless of whether you are a tenant or a freeholder in Montpelier,the lease extension experts that we work with will always be prepared to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Montpelier valuers.
Nathaniel owned a conversion apartment in Montpelier on the market with a lease of fraction over sixty years left. Nathaniel on an informal basis approached his freeholder a well known London-based freehold company and enquired on a premium to extend the lease. The freeholder indicated a willingness to extend 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. Ordinarily, ground rent would not be due on a lease extension were Nathaniel to exercise his statutory right. Nathaniel procured expert legal guidance and secured an acceptable resolution without going to tribunal and sell the flat.
In 2012 we were phoned by Mr Felix Jones who, having acquired a one bedroom apartment in Montpelier in February 2010. The question was if we could shed any light on how much (approximately) compensation to the landlord could be to extend the lease by an additional years. Comparative flats in Montpelier with a long lease were valued about £189,000. The average amount of ground rent was £55 collected every twelve months. The lease elapsed in 2079. Given that there were 53 years unexpired we approximated the premium to the freeholder for the lease extension to be within £28,500 and £33,000 plus costs.
Last Summer we were e-mailed by Dr Eli Petit , who acquired a basement apartment in Montpelier in August 2002. We are asked if we could shed any light on how much (roughly) premium would be to prolong the lease by ninety years. Comparative premises in Montpelier with an extended lease were valued about £290,000. The average ground rent payable was £45 collected yearly. The lease finished on 15 January 2099. Given that there were 73 years remaining we approximated the premium to the landlord to extend the lease to be within £9,500 and £11,000 plus fees.