The market value of a leasehold property in Montpelier depends on how long the lease has remaining. If it is near to or fewer than eighty years you should anticipate problems on re-sale, so it is recommended to arrange for the lease to be extended ahead of purchasing. It is preferable to commence the process of extending the lease is when a lease still has 82 years unexpired so that formalities can be finalised well before the eighty year threshold. Statute enables Montpelier qualifying lessees to an additional term of ninety years on top of the existing term, at a nominal rent (no ground rent). The intention of the valuation is to determine the amount payable by the lessee to the freeholder for the purchase of the lease extension.
Leasehold properties in Montpelier with over one hundred years remaining on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such circumstances there is often little to be gained by buying the freehold unless savings on ground rent and maintenance charges warrant 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. |
| 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; |
| 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Regardless of whether you are a tenant or a landlord in Montpelier,the lease extension experts that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Montpelier valuers.
William owned a studio flat in Montpelier on the market with a lease of a few days over sixty years remaining. William on an informal basis spoke with his landlord a well known Manchester-based freehold company for a lease extension. The landlord indicated a willingness to grant an extension taking the lease to 125 years on the basis of a new rent at the outset set at £150 per annum and increase every 25 years thereafter. Ordinarily, ground rent would not be payable on a lease extension were William to invoke his statutory right. William procured expert advice and was able to make a more informed judgement and deal with the matter and readily saleable.
In 2009 we were contacted by Ms B Rogers who, having completed a ground floor flat in Montpelier in June 2008. The dilemma was if we could estimate the price could be to prolong the lease by a further 90 years. Comparable flats in Montpelier with an extended lease were in the region of £213,600. The mid-range amount of ground rent was £60 collected every twelve months. The lease termination date was in 2083. Given that there were 57 years as a residual term we approximated the compensation to the landlord to extend the lease to be within £30,400 and £35,200 exclusive of expenses.
In 2011 we were phoned by Mr and Mrs. O Hall who, having took over the lease of a ground floor flat in Montpelier in August 2007. We are asked if we could approximate the premium would likely be for a ninety year extension to my lease. Similar homes in Montpelier with 100 year plus lease were valued about £200,000. The mid-range ground rent payable was £50 billed per annum. The lease terminated on 3 January 2103. Having 77 years outstanding we approximated the compensation to the landlord for the lease extension to be between £8,600 and £9,800 plus fees.