Potton leases on domestic properties are gradually losing value. Where your lease has in the region of ninety years remaining, you should start considering the need for a lease extension. If lease term falls under 80 years, you will then be required to pay half of the property's 'marriage value' on top of the usual cost of the lease extension to your landlord. Marriage value is the amount of additional value that a lease extension will add to the property. Flat owners in Potton will usually be legally entitled to a lease extension; however It would be wise to check with a conveyancer to confirm if you qualify. In certain circumstances you may not qualify. There are also strict timetables and formalities to follow once the process is initiated so it’s best to be guided by a lawyer during the process.
It is conventional wisdom that a property with over one hundred years unexpired lease term is worth approximately the equivalent as a freehold. Where an further 90 years added to any lease with more than 30 years remaining, the residence will be worth the same as a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage should be declined (see exception below). Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office. 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; |
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| 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. |
The conveyancers that we work with handle Potton lease extensions and help protect your position. A lease extension can be arranged to be completed to coincide with a change of ownership so the costs of the lease extension are paid for using part of the sale proceeds. You really do need expert legal advice in this difficult and technical area of law. The lawyer we work with provide it.
Oliver owned a high value apartment in Potton on the market with a lease of a few days over sixty years left. Oliver informally approached his freeholder a well known Manchester-based freehold company and enquired on a premium to extend the lease. The landlord was prepared to give an extension on non-statutory terms taking the lease to 125 years subject to an increased rent to £100 per annum. Ordinarily, ground rent would not be due on a lease extension were Oliver to invoke his statutory right. Oliver procured expert legal guidance and secured an acceptable resolution informally and ending up with a market value flat.
In 2013 we were called by Mr W Evans who, having bought a one bedroom flat in Potton in May 1997. We are asked if we could approximate the premium could be for a 90 year lease extension. Comparative premises in Potton with a long lease were worth £257,800. The mid-range ground rent payable was £65 invoiced annually. The lease elapsed in 2089. Given that there were 65 years left we approximated the premium to the landlord to extend the lease to be within £17,100 and £19,800 plus fees.
Last month we were e-mailed by Mr and Mrs. E Mercier , who moved into a garden apartment in Potton in June 2002. The question was if we could shed any light on how much (roughly) compensation to the landlord would be to extend the lease by a further 90 years. Comparative properties in Potton with an extended lease were worth £191,400. The mid-range ground rent payable was £55 collected annually. The lease concluded in 2078. Having 54 years outstanding we calculated the compensation to the freeholder for the lease extension to be within £34,200 and £39,600 exclusive of costs.