When it comes to long leasehold premises in Small Heath, you are in fact renting it for a certain amount of time. Modern flat leases are usually granted for 99 years or 125. Many leasehold owners become complacent as this seems like a long period of time, you may think about extending the lease sooner as opposed to later. The general rule is that the shorter the lease is the cost of extending the lease increases markedly notably once there are fewer than 80 years left. Residents in Small Heath with a lease drawing near to 81 years remaining should seriously think of extending it as soon as possible. When the lease term has less than eighty years remaining, under the relevant legislation the landlord can calculate and demand a greater amount, assessed on a technical multiplication, strangely termed as “marriage value” which is payable.
It is conventional wisdom that a property with in excess of 100 years unexpired lease term is worth roughly the same as a freehold. Where an further ninety years added to all but the shortest lease, the residence will be equivalent in value to a freehold for decades to come.
Lender | Requirement |
---|---|
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; |
Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
Halifax | Minimum 70 years from the date of the mortgage. |
Royal Bank of Scotland | Mortgage term plus 30 years. |
The lawyers that we work with procure Small Heath 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 conveyancing solicitor we work with provide it.
14 months ago Logan, started to get near to the 80-year mark with the lease on his two bedroom apartment in Small Heath. Having purchased his property 18 years ago, the unexpired term was of minimal relevance. Luckily, he noticed he would soon be paying way over the odds for a lease extension. Logan arranged for a lease extension just in the nick of time in July. Logan and the freeholder in the end agreed on an amount of £5,500 . If the lease had gone lower than 80 years, the amount would have escalated by at least £1,125.
In 2010 we were e-mailed by Mr U Cox who, having was assigned a lease of a basement apartment in Small Heath in May 2010. The question was if we could shed any light on how much (roughly) premium would be for a ninety year extension to my lease. Similar homes in Small Heath with a long lease were valued about £218,000. The mid-range amount of ground rent was £45 invoiced quarterly. The lease end date was in 2088. Considering the 63 years as a residual term we approximated the compensation to the freeholder for the lease extension to be within £17,100 and £19,800 not including fees.
In 2013 we were e-mailed by Ms R Gunderson who, having took over the lease of a studio flat in Small Heath in January 2009. We are asked if we could estimate the compensation to the landlord would likely be for a ninety year lease extension. Similar premises in Small Heath with 100 year plus lease were in the region of £270,000. The average amount of ground rent was £55 invoiced quarterly. The lease ran out on 18 January 2099. Having 74 years as a residual term we calculated the premium to the freeholder to extend the lease to be within £9,500 and £11,000 not including expenses.