Mynydd Isa residential property owned on a long lease is a wasting asset as the leaseholder merely owns the property for a set term.
Leasehold residencies in Mynydd Isa with in excess of one hundred years outstanding on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such situations there is often little upside in buying the reversionary interest unless savings on ground rent and maintenance charges justify it.
| 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Santander | If the property is leasehold, the remaining unexpired lease term at the end of the new mortgage term must be at least 50 years where any part of the mortgage is on Interest Only and 30 years if all loan parts are on Capital Repayment and Interest. You must report the unexpired lease term to us and await our instructions if:
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Retaining our service will provide you increased control over the value of your Mynydd Isa leasehold, as your property will be more valuable and marketable in respect of lease length should you decide to sell. The conveyancing solicitors that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
14 months ago Liam, started to get close to the eighty-year mark with the lease on his purpose- built flat in Mynydd Isa. In buying his home two decades ago, the length of the lease was of minimal significance. Luckily, it dawned on him that he needed to take steps soon on a lease extension. Liam was able to extend his lease just under the wire last January. Liam and the landlord who owned the flat above subsequently agreed on a premium of £5,500 . If the lease had dropped lower than eighty years, the amount would have gone up by at least £850.
In 2012 we were called by Mrs Y Brooks who, having purchased a one bedroom flat in Mynydd Isa in September 1999. We are asked if we could shed any light on how much (roughly) price would be for a ninety year extension to my lease. Identical flats in Mynydd Isa with a long lease were in the region of £200,800. The average amount of ground rent was £65 billed yearly. The lease finished in 2086. Considering the 60 years as a residual term we calculated the compensation to the landlord to extend the lease to be within £20,900 and £24,200 plus costs.
In 2010 we were contacted by Dr B Rose who, having took over the lease of a recently refurbished flat in Mynydd Isa in September 2009. The question was if we could estimate the price would be for a 90 year extension to my lease. Comparative residencies in Mynydd Isa with an extended lease were valued about £255,000. The average ground rent payable was £50 invoiced quarterly. The lease finished on 11 September 2097. Taking into account 71 years outstanding we approximated the premium to the freeholder for the lease extension to be between £9,500 and £11,000 exclusive of costs.