For those whose Woburn flat is held on a long lease, the message is clear – if you do nothing, your property will ultimately revert to the freeholder, leaving you empty-handed. The fewer the years remaining the lower the value of the property and the more it will cost to obtain a lease extension.
It is generally accepted that a property with more than 100 years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional ninety years added to any lease with more than 35 years left, the premises will be worth the same as a freehold for many years ahead.
| 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; |
| Chelsea 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. |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must also be not less than 75 years at the outset of the mortgage. |
The lawyers that we work with handle Woburn 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 conveyancer we work with provide it.
Connor owned a high value apartment in Woburn on the market with a lease of a little over 59 years unexpired. Connor informally contacted his freeholder a well known London-based freehold company for a lease extension. The freeholder was keen to give an extension on non-statutory terms taking the lease to 125 years subject to an increased rent to £200 annually. Ordinarily, ground rent would not be due on a lease extension were Connor to exercise his statutory right. Connor obtained expert advice and secured satisfactory deal without resorting to tribunal and readily saleable.
Mrs B Khan owned a purpose-built flat in Woburn in March 2005. The question was if we could approximate the premium would likely be for a ninety year lease extension. Similar premises in Woburn with an extended lease were worth £184,000. The average amount of ground rent was £55 billed every twelve months. The lease elapsed on 12 May 2079. Given that there were 53 years unexpired we approximated the compensation to the freeholder to extend the lease to be within £28,500 and £33,000 plus expenses.
Last year we were called by Dr Ryan Young , who purchased a basement flat in Woburn in May 1996. We are asked if we could estimate the premium would likely be for a ninety year lease extension. Comparable premises in Woburn with 100 year plus lease were valued about £290,000. The mid-range ground rent payable was £45 invoiced annually. The lease came to a finish on 20 November 2099. Given that there were 73 years remaining we calculated the compensation to the landlord to extend the lease to be within £9,500 and £11,000 exclusive of expenses.