Poundbury leases on residential deteriorating in value. if your lease has approximately 90 years remaining, you should start considering the need for a lease extension. If lease term falls under eighty years, you will then be required to pay 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of extra value that a lease extension will add to the property. Leasehold owners in Poundbury will usually be legally entitled to a lease extension; however a solicitor will confirm your eligibility. In some circumstances you may not qualify. There are also strict timetables and steps to follow once the process is triggered so it’s sensible to be guided by a lawyer during the process.
It is generally accepted that a residential leasehold with more than 100 years remaining is worth approximately the equivalent as a freehold. Where an further 90 years added to any lease with more than 30 years remaining, the premises will be worth the same as a freehold for many years in the future.
| 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; |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 75 years plus the term of the mortgage at the outset of the mortgage. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The conveyancers that we work with procure Poundbury 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 lawyer we work with provide it.
In the wake of 6 months of lengthy discussions with the landlord of her leasehold flat in Poundbury, Elizabeth commenced the lease extension process as the 80 year deadline was fast coming. The transaction was finalised in February 2012. The landlord’s costs were restricted to slightly above 500 GBP.
In 2014 we were approached by Dr Adam Richardson who, having purchased a purpose-built flat in Poundbury in January 2008. We are asked if we could approximate the price could be to prolong the lease by ninety years. Similar properties in Poundbury with an extended lease were worth £174,200. The average ground rent payable was £55 invoiced monthly. The lease came to a finish in 2077. Given that there were 51 years left we approximated the premium to the landlord to extend the lease to be within £31,400 and £36,200 not including costs.
Dr J Lee acquired a one bedroom apartment in Poundbury in August 2004. We are asked if we could shed any light on how much (roughly) price would be to prolong the lease by 90 years. Comparative properties in Poundbury with an extended lease were in the region of £285,000. The mid-range amount of ground rent was £45 invoiced quarterly. The lease terminated on 13 March 2097. Considering the 71 years outstanding we estimated the premium to the landlord for the lease extension to be between £12,400 and £14,200 not including fees.