Poundbury leases on domestic properties are gradually losing value. if your lease has about 90 years unexpired, you should start considering the need for a lease extension. An important point to note is that it is desirable for your lease extension to be in place before the term of the existing lease drops below eighty years - otherwise a higher amount will be payable. Leasehold owners in Poundbury will usually qualify for a lease extension; however a solicitor should be able check your eligibility. In certain situations you may not be entitled. There are also strict deadlines and procedures to comply with once the process has commenced so it’s prudent to be guided by a conveyancer during the process.
It is conventional wisdom that a residential leasehold with in excess of 100 years unexpired lease term is worth roughly the equivalent as a freehold. Where an additional 90 years added to any lease with more than 30 years left, the residence will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| Lloyds TSB Scotland | Minimum 70 years from the date 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 |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The conveyancing solicitors that we work with handle Poundbury 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.
Last year Lucas, came seriously close to the eighty-year mark with the lease on his studio flat in Poundbury. In buying his flat twenty years previously, the unexpired term was of little relevance. Luckily, it dawned on him that he would soon be paying an inflated amount for a lease extension. Lucas extended the lease at the eleventh hour in March. Lucas and the landlord who owned the flat above eventually agreed on an amount of £5,000 . If the lease had dropped to less than 80 years, the price would have become more exhorbitant by at least £850.
In 2011 we were contacted by Mr and Mrs. A Alexander who, having acquired a newly refurbished flat in Poundbury in September 2010. The dilemma was if we could shed any light on how much (roughly) compensation to the landlord could be to extend the lease by 90 years. Comparable homes in Poundbury with a long lease were valued around £285,000. The mid-range ground rent payable was £45 billed yearly. The lease ended on 2 November 2096. Given that there were 71 years remaining we estimated the premium to the landlord for the lease extension to be within £12,400 and £14,200 exclusive of professional charges.
Mr Noah Harris purchased a garden apartment in Poundbury in May 2010. We are asked if we could approximate the compensation to the landlord would be for a ninety year lease extension. Comparable residencies in Poundbury with an extended lease were worth £225,800. The mid-range amount of ground rent was £60 invoiced annually. The lease came to a finish in 2085. Considering the 60 years remaining we approximated the premium to the freeholder for the lease extension to be between £23,800 and £27,400 not including professional charges.