Unfortunately that a Royton residential lease is a deteriorating asset. As the lease term reduces so does the value of the property. The extent of this is taken for granted in the early years due to the deflation being disguised by increases in the Royton property market.Once your lease gets to 85ish years, you need to 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 eighty years - otherwise a higher premium will be due. Most flat owners in Royton will be able to extend under the legislation; however a conveyancer will be able to clarify whether you are eligibility. In some cases you may not be entitled. There are also strict timetables and procedures to be adhered to once the process has commenced and you will need to be guided by your lawyer from beginning to end of the formalities.
It is generally accepted that a property with over 100 years remaining is worth roughly the equivalent as a freehold. Where an further ninety years added to all but the shortest lease, the premises will be equivalent in value to a freehold for many years ahead.
| 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Coventry Building Society | 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
Lease extensions in Royton can be a difficult process. We recommend you procure guidance from a conveyancing solicitor and surveyor well versed in the legislation and lease extension process.
We provide you with an expert from a selection of lease extension solicitors, which ensures a targeted and efficient service as you have a dedicated port of call with an individual lawyer. Our lease extension solicitors have in-depth market knowledge procuring Royton lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.
Jacob was the the leasehold owner of a studio flat in Royton on the market with a lease of just over 72 years remaining. Jacob on an informal basis contacted his freeholder a well known Bristol-based freehold company for a lease extension. The freeholder was prepared to give an extension on non-statutory terms taking the lease to 125 years subject to a new rent initially set at £200 per annum and doubled every twenty five years thereafter. Ordinarily, ground rent would not be due on a lease extension were Jacob to exercise his statutory right. Jacob obtained expert legal guidance and secured an acceptable deal informally and sell the property.
Mr and Mrs. P Evans bought a one bedroom flat in Royton in October 2006. The dilemma was if we could approximate the compensation to the landlord would likely be to extend the lease by 90 years. Comparable residencies in Royton with a long lease were worth £166,800. The mid-range ground rent payable was £50 billed monthly. The lease ran out on 18 November 2076. Taking into account 50 years left we approximated the premium to the landlord for the lease extension to be between £32,300 and £37,400 exclusive of costs.
Last year we were called by Dr Elizabeth Edwards , who bought a purpose-built flat in Royton in April 1999. The dilemma was if we could estimate the premium would be for a 90 year lease extension. Identical homes in Royton with a long lease were valued around £280,000. The average ground rent payable was £45 invoiced yearly. The lease ended on 20 October 2096. Having 70 years as a residual term we calculated the premium to the freeholder to extend the lease to be between £12,400 and £14,200 plus expenses.