For those whose Padstow home is held on a long lease, the message is clear – if you do nothing, your property will eventually revert to your landlord, leaving you empty-handed. The shorter the lease the less it is worth and the more expensive it will be to obtain a lease extension.
Leasehold premises in Padstow with more than one hundred years left on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such situations there is often little upside in buying the reversionary interest unless savings on ground rent and service charges warrant it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 30 years plus the term of the mortgage at the outset of the mortgage. |
| Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
Retaining our service gives you increased control over the value of your Padstow leasehold, as your property will be more valuable and marketable in terms of lease length should you wish to sell. The conveyancers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Milo owned a studio flat in Padstow on the market with a lease of a little over sixty years unexpired. Milo on an informal basis contacted his landlord being a well known Manchester-based freehold company for a lease extension. The freeholder was prepared to grant an extension on non-statutory terms taking the lease to 125 years subject to a rise in the rent to £125 yearly. No ground rent would be due on a lease extension were Milo to invoke his statutory right. Milo obtained expert legal guidance and was able to make an informed judgement and deal with the matter and readily saleable.
Last year we were phoned by Dr E Robinson , who purchased a ground floor apartment in Padstow in January 1996. We are asked if we could estimate the price could be for a ninety year extension to my lease. Comparative properties in Padstow with a long lease were in the region of £300,000. The average ground rent payable was £50 invoiced every twelve months. The lease terminated on 14 January 2102. Given that there were 76 years remaining we estimated the compensation to the freeholder for the lease extension to be between £8,600 and £9,800 exclusive of costs.
Mr and Mrs. H Thompson owned a first floor flat in Padstow in January 2002. The dilemma was if we could estimate the compensation to the landlord would be for a ninety year extension to my lease. Similar homes in Padstow with a long lease were worth £257,800. The mid-range ground rent payable was £65 invoiced yearly. The lease ended on 24 September 2091. Considering the 65 years outstanding we estimated the premium to the freeholder for the lease extension to be within £17,100 and £19,800 plus fees.