Poundbury residential property owned on a long lease is a depreciating asset because a leaseholder merely owns the property for a period of years.
It is conventional wisdom that a residential leasehold with in excess of 100 years unexpired lease term is worth approximately the same as a freehold. Where an additional ninety years added to all but the shortest lease, the property will be worth the same as a freehold for many years in the future.
| 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. |
| 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. |
| 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. |
| 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 enhanced control over the value of your Poundbury leasehold, as your property will be more valuable and marketable in respect of lease length should you wish to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
In 2014 Sam, came critically close to the eighty-year mark with the lease on his first floor apartment in Poundbury. Having purchased his flat two decades ago, the unexpired term was of no interest. by good luck, he became aware that he needed to take steps soon on Extending the lease. Sam extended the lease at the eleventh hour last April. Sam and the freeholder via the management company subsequently settled on the final figure of £5,500 . If the lease had gone below 80 years, the figure would have become more costly by a minimum £1,100.
Last month we were called by Dr Jason Wilson , who acquired a newly refurbished flat in Poundbury in March 2006. The question was if we could estimate the price would be for a 90 year lease extension. Identical residencies in Poundbury with an extended lease were worth £171,800. The average amount of ground rent was £55 billed yearly. The lease elapsed on 8 May 2075. Given that there were 50 years outstanding we calculated the premium to the freeholder for the lease extension to be between £33,300 and £38,400 not including fees.
In 2014 we were called by Dr Jasper Jones who, having purchased a one bedroom flat in Poundbury in June 1998. The question was if we could shed any light on how much (approximately) premium would be for a ninety year lease extension. Identical homes in Poundbury with a long lease were valued about £280,000. The average ground rent payable was £45 collected monthly. The lease finished on 13 May 2095. Given that there were 70 years left we estimated the compensation to the landlord for the lease extension to be between £12,400 and £14,200 plus costs.