Roath leases on residential properties are gradually decreasing in value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of the lease gets more expensive. The majority of owners of residential leasehold property in Roath enjoy rights under legislation to extend the terms of their leases. If you are a leasehold owner in Roath you would be well advised to see if your lease has between seventy and 90 years left. In particular once the remaining lease term slips under 80 years, the compensation to the landlord for any lease extension sharply increases as an element of the premium you will incur is what is known as a marriage value
Leasehold properties in Roath with in excess of one hundred years remaining on the lease are often referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your home. In such situations there is often little to be gained by buying the freehold unless savings on ground rent and maintenance charges merit it.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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; |
| 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Engaging our service will provide you better control over the value of your Roath leasehold, as your property will be more valuable and saleable in respect of lease length should you want to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Daniel owned a studio apartment in Roath on the market with a lease of fraction over fifty eight years unexpired. Daniel informally approached his freeholder being a well known London-based freehold company for a lease extension. The landlord was prepared to grant an extension on non-statutory terms taking the lease to 125 years subject to an increased rent to £100 yearly. Ordinarily, ground rent would not be payable on a lease extension were Daniel to invoke his statutory right. Daniel procured expert legal guidance and was able to make a more informed judgement and handle with the matter and ending up with a market value flat.
Last month we were e-mailed by Dr D Jones , who completed a ground floor apartment in Roath in March 2003. We are asked if we could estimate the premium could be for a 90 year extension to my lease. Comparable premises in Roath with a long lease were worth £290,000. The mid-range ground rent payable was £45 invoiced quarterly. The lease lapsed in 2097. Having 73 years as a residual term we approximated the compensation to the landlord to extend the lease to be between £9,500 and £11,000 not including costs.
In 2013 we were e-mailed by Dr Aaron Scott who, having owned a basement flat in Roath in March 2002. We are asked if we could estimate the price would be for a ninety year extension to my lease. Similar flats in Roath with 100 year plus lease were valued about £240,600. The mid-range ground rent payable was £60 billed annually. The lease terminated on 7 October 2086. Taking into account 62 years remaining we calculated the premium to the freeholder to extend the lease to be between £21,900 and £25,200 plus professional charges.