Poundbury leases on residential deteriorating in value. Where your lease has in the region of ninety years left, you should start considering the need for a lease extension. Eighty years is a significant number: when the remaining term of a lease falls below this level then you begin incurring an additional element called marriage value. Leasehold owners in Poundbury will usually qualify for a lease extension; however a solicitor should be able confirm if you qualify. In certain cases you may not be entitled. There are also strict timetables and procedures to follow once the process has started so it’s best to be guided by a conveyancing solicitor during the process.
It is generally considered that a residential leasehold with more than 100 years remaining is worth roughly 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 decades to come.
| Lender | Requirement |
|---|---|
| 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. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
| 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. |
The conveyancing solicitors that we work with undertake 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 conveyancer we work with provide it.
Last year Alfie, started to get near to the 80-year mark with the lease on his basement apartment in Poundbury. Having bought his property 18 years ago, the length of the lease was of minimal relevance. Thankfully, he became aware that he would soon be paying way over the odds for a lease extension. Alfie extended the lease just ahead of time last July. Alfie and the freeholder via the managing agents eventually settled on an amount of £6,000 . If he failed to meet the deadline, the price would have escalated by at least £1,100.
Mr and Mrs. M Pérez completed a ground floor flat in Poundbury in April 2002. We are asked if we could estimate the compensation to the landlord would be to extend the lease by an additional years. Comparative residencies in Poundbury with an extended lease were valued around £223,400. The mid-range amount of ground rent was £60 billed per annum. The lease ended on 21 August 2085. Having 59 years unexpired we calculated the premium to the freeholder for the lease extension to be between £27,600 and £31,800 plus legals.
Mr John Bennett acquired a one bedroom flat in Poundbury in September 1997. The question was if we could shed any light on how much (approximately) price would likely be for a 90 year lease extension. Comparative properties in Poundbury with a long lease were valued around £205,000. The average ground rent payable was £50 billed every twelve months. The lease expired on 3 November 2105. Considering the 79 years unexpired we estimated the premium to the landlord for the lease extension to be within £8,600 and £9,800 plus professional charges.