For anyone whose Torrington home is held on a long lease, the message is clear – if no remedial action is taken, your property will eventually revert to the freeholder, leaving you empty-handed. The fewer the years remaining the lower the value of the property and the more expensive it will be to extend the lease.
It is generally considered that a residential leasehold with in excess of one hundred years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional ninety years added to all but the shortest lease, the premises will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| 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; |
| Halifax | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The lawyers that we work with handle Torrington 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.
Last year Matthew, came seriously close to the eighty-year mark with the lease on his two bedroom apartment in Torrington. In buying his home 18 years ago, the length of the lease was of little significance. Luckily, he noticed he would soon be paying way over the odds for Extending the lease. Matthew arranged for a lease extension just under the wire last September. Matthew and the landlord in the end agreed on the final figure of £6,000 . If he not met the deadline, the sum would have become more costly by at least £1,000.
Last Winter we were e-mailed by Ms Alisha Gunderson , who took over the lease of a purpose-built flat in Torrington in January 2009. The question was if we could approximate the compensation to the landlord would likely be for a ninety year extension to my lease. Identical premises in Torrington with 100 year plus lease were worth £260,000. The mid-range ground rent payable was £50 invoiced yearly. The lease end date was in 2097. Given that there were 72 years as a residual term we calculated the premium to the landlord for the lease extension to be between £9,500 and £11,000 exclusive of fees.
In 2010 we were approached by Mr Michael Bailey who, having took over the lease of a ground floor apartment in Torrington in May 2009. We are asked if we could estimate the premium would be to extend the lease by 90 years. Similar properties in Torrington with a long lease were in the region of £261,600. The mid-range amount of ground rent was £60 collected per annum. The lease lapsed in 2077. Given that there were 52 years unexpired we calculated the premium to the freeholder for the lease extension to be within £39,000 and £45,000 plus legals.