It’s an underpublicised truth that a Rochdale residential lease is a wasting asset. As the lease term reduces so does the value of the property. The extent of this is not fully appreciated in the first few years due to the reduction being disguised by increases in the Rochdale property prices.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 slips below 80 years - otherwise a higher premium will be due. The majority of leasehold owners in Rochdale will be able to extend under the legislation; however a lawyer will be able to confirm whether you are eligibility. In some cases you may not be entitled. There are also strict timeframes and procedures to be adhered to once the process has commenced and you will need to be guided by your lawyer for the duration of the formalities.
Leasehold residencies in Rochdale with in excess of 100 years remaining on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such circumstances there is often little to be gained by purchasing the freehold unless savings on ground rent and service 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. |
| 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; |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 75 years plus the term of the mortgage at the outset of the mortgage. |
| 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 |
The conveyancers that we work with handle Rochdale 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.
Subsequent to unsuccessful negotiations with the freeholder of her garden apartment in Rochdale, Melissa commenced the lease extension process as the eighty year threshold was rapidly approaching. The transaction was concluded in October 2011. The landlord’s fees were kept to an absolute minimum.
Mr John Turner took over the lease of a one bedroom apartment in Rochdale in May 1998. The question was if we could estimate the price would be to prolong the lease by a further 90 years. Similar homes in Rochdale with an extended lease were worth £285,000. The mid-range amount of ground rent was £45 billed monthly. The lease end date was on 25 May 2098. Taking into account 72 years outstanding we estimated the premium to the freeholder for the lease extension to be within £12,400 and £14,200 not including professional charges.
In 2011 we were e-mailed by Mr T Simon who, having acquired a garden flat in Rochdale in October 2006. We are asked if we could shed any light on how much (roughly) price could be for a ninety year lease extension. Similar homes in Rochdale with an extended lease were worth £233,200. The mid-range amount of ground rent was £60 collected annually. The lease came to a finish in 2087. Considering the 61 years outstanding we calculated the premium to the landlord for the lease extension to be between £22,800 and £26,400 exclusive of legals.