Owning a flat usually means owning a lease of the property, this is a ‘time-limited’ interest becoming shorter every day. This lease will usually be granted for a fixed period of time , usually 99 or 125 years, although we have witnessed longer and shorter terms in Temple Fortune. Inevitably, the term of lease remaining shortens over time. This is often ignored and only raises itself as an issue when the flat or house has to be sold or refinanced. The shorter the lease the lower the value of the property and the more expensive it will be to extend the lease. Eligible long lease owners in Temple Fortune have the right to extend the lease for a further ninety years under legislation. Do give careful attention before putting off your Temple Fortune lease extension. Holding off the cost now likely increases the price you will eventually incur to extend your lease
Leasehold premises in Temple Fortune with in excess of one hundred years left on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your home. In such circumstances there is often little upside in buying the freehold unless savings on ground rent and service charges warrant it.
| 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; |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| 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. |
Regardless of whether you are a tenant or a freeholder in Temple Fortune,the lease extension experts that we work with will always be prepared to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Temple Fortune valuers.
Last Autumn Arthur, came critically close to the 80-year mark with the lease on his two bedroom flat in Temple Fortune. Having purchased his flat two decades ago, the lease term was of minimal importance. As luck would have it, he became aware that he would imminently be paying way over the odds for a lease extension. Arthur arranged for a lease extension at the eleventh hour in July. Arthur and the landlord who owned the flat above in the end settled on the final figure of £6,000 . If he failed to meet the deadline, the figure would have gone up by a minimum £1,075.
Last year we were contacted by Dr Natasha Michel , who bought a one bedroom flat in Temple Fortune in August 2003. We are asked if we could shed any light on how much (roughly) compensation to the landlord would be for a 90 year lease extension. Comparable flats in Temple Fortune with a long lease were in the region of £223,400. The mid-range amount of ground rent was £60 collected every twelve months. The lease finished in 2083. Having 59 years unexpired we approximated the compensation to the freeholder for the lease extension to be between £27,600 and £31,800 plus costs.
An example of a Lease Extension matter before the tribunal for a Temple Fortune flat is Flat 2 2 Netherfield Road in April 2010. The Tribunale held that premium payable for a 90 year extension to the existing Lease should be £7,705. This case related to 1 flat. The remaining number of years on the lease was 76 years.