Unfortunately that a Poundbury residential lease is a wasting asset. As the lease term diminishes so does the value of the property. The extent of this is not fully appreciated in the early years due to the loss of value being disguised by increases in the Poundbury property market.Where your lease has approximately ninety years left, you should start considering a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease dips lower than eighty years - otherwise a higher amount will be payable. The majority of flat owners in Poundbury will be able to extend under the legislation; however a conveyancing solicitor will be able to clarify if you qualify for an extension. In some situations you may not be entitled. There are also strict timetables and procedures to follow once the process is initiated and you will need to be guided by your conveyancer for the duration of the formalities.
It is generally considered that a property with in excess of one hundred years remaining is worth roughly the same as a freehold. Where an additional ninety years added to any lease with more than 35 years unexpired, the property will be equivalent in value to a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
| 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. |
Engaging our service gives you better control over the value of your Poundbury leasehold, as your property will be more valuable and saleable in relation to the lease length should you decide to sell. The conveyancing solicitors that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
During the course of the last few months Dylan, came critically near to the 80-year mark with the lease on his leasehold flat in Poundbury. In buying his flat 18 years previously, the length of the lease was of minimal significance. Luckily, he realised he needed to take action soon on Extending the lease. Dylan arranged for a lease extension just in the nick of time last June. Dylan and the freeholder eventually agreed on the final figure of £6,000 . If he not met the deadline, the amount would have gone up by a minimum £1,100.
Mr and Mrs. D Dupont acquired a ground floor flat in Poundbury in June 2005. The dilemma was if we could shed any light on how much (roughly) premium would be for a 90 year lease extension. Similar premises in Poundbury with 100 year plus lease were valued about £243,000. The average amount of ground rent was £65 collected yearly. The lease lapsed on 5 March 2089. Having 63 years outstanding we calculated the compensation to the landlord for the lease extension to be within £20,000 and £23,000 exclusive of fees.
Last August we were e-mailed by Dr S Bertrand , who bought a one bedroom apartment in Poundbury in September 2002. We are asked if we could estimate the price would be for a ninety year lease extension. Comparative residencies in Poundbury with a long lease were in the region of £181,600. The mid-range amount of ground rent was £55 billed per annum. The lease lapsed on 16 February 2078. Given that there were 52 years left we approximated the premium to the landlord to extend the lease to be between £30,400 and £35,200 exclusive of fees.