It’s an underpublicised certainty that a Peak District residential lease is a deteriorating asset. As the lease term diminishes 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 Peak District property prices.Once your lease gets to 85ish years, you should start thinking about a lease extension. If the number of years remaining slips under eighty years, you will end up paying half of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of additional value that a lease extension will add the property Most leasehold owners in Peak District will be able to extend under the legislation; however a conveyancer will be able to clarify whether you qualify for an extension. In some cases you may not be entitled. There are also strict timetables and procedures to be adhered to once the process is initiated and you will need to be guided by your lawyer from beginning to end of the formalities.
It is generally accepted that a property with over one hundred years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional 90 years added to any lease with more than 30 years left, the property will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| 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. |
| Coventry Building Society | 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| 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 |
| 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. |
Retaining our service will provide you increased control over the value of your Peak District leasehold, as your property will be more valuable and marketable in respect of lease length should you decide to sell. The conveyancers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Last October Aarav, came dangerously close to the 80-year mark with the lease on his purpose- built flat in Peak District. In buying his property 19 years ago, the lease term was of minimal importance. Thankfully, he recognised he would soon be paying way over the odds for a lease extension. Aarav was able to extend his lease just under the wire in May. Aarav and the landlord in the end agreed on the final figure of £5,000 . If the lease had fallen to less than eighty years, the sum would have escalated by at least £925.
Last July we were called by Mr and Mrs. D Wright , who owned a first floor apartment in Peak District in June 2009. The dilemma was if we could shed any light on how much (approximately) compensation to the landlord could be for a ninety year extension to my lease. Comparable residencies in Peak District with 100 year plus lease were worth £250,000. The average amount of ground rent was £50 collected yearly. The lease expired in 2093. Given that there were 68 years unexpired we calculated the compensation to the freeholder to extend the lease to be between £9,500 and £11,000 exclusive of legals.
Dr Y Garcia acquired a ground floor apartment in Peak District in June 2002. The dilemma was if we could shed any light on how much (roughly) compensation to the landlord would be to extend the lease by 90 years. Similar homes in Peak District with an extended lease were worth £285,000. The mid-range ground rent payable was £55 collected annually. The lease ran out on 22 February 2104. Taking into account 79 years left we calculated the compensation to the freeholder to extend the lease to be between £13,300 and £15,400 not including costs.