What is a leasehold extension?

A leasehold extension is the process of extending the lease term of a property held on a leasehold basis. It helps maintain the property's value and desirability. Leasehold extension legislation allows leaseholders to extend their lease, ensuring the property remains attractive for sale or mortgage purposes.

How long is a leasehold extension ?

The length of a leasehold extension can vary depending on the jurisdiction and specific circumstances. In some countries, such as the United Kingdom, leasehold extensions are typically granted for an additional 90 years beyond the remaining term of the existing lease. However, it's important to note that leasehold extension regulations can differ, and it's advisable to consult local laws or seek professional advice like leasehold valuations for accurate information regarding leasehold extensions in a specific jurisdiction.

What are the benefits of lease extension ?

Extending the leasehold of a property offers benefits such as increased property value, improved marketability, easier access to mortgage financing, peace of mind and security, the avoidance of escalating costs, and more control over property management.

What happens to leasehold property after 99 years ?

After 99 years, the leasehold property typically reverts back to the freeholder, unless the lease is extended by the leaseholder. The ownership of the property, along with the land it is built on, returns to the freeholder once the lease expires. As a lease approaches its expiration, the property’s value may decrease, making it more challenging to sell or mortgage. It is advisable for leaseholders to consider extending their lease well before it reaches the 99-year mark to maintain the property’s value and their ownership rights.

Why choose leasehold Valuations for Lease extension or Buying Freehold ?

1. Fair Price: A leasehold valuation ensures you pay a fair price for a lease extension or freehold purchase.2. Increased Property Value: Extending the lease or buying the freehold can potentially increase your property’s value.3. Cost Savings: Accurate valuation helps minimise future costs like ground rent.4. Stronger Negotiation: A valuation report strengthens your position during negotiations with landlords.5. Legal Compliance: Valuations ensure you meet legal requirements for lease extensions or freehold purchases.6. Future Planning: Valuations help you plan for selling or passing on the property to future generations.7. Expert Advice: Engaging a valuer provides access to their expertise and guidance.8. Mortgage Support: Valuation reports improve your mortgage opportunities for lease extensions or freehold purchases.

How much does it cost to renew a leasehold ?

The cost of renewing a leasehold in the UK can vary depending on various factors, such as the property value, the length of the renewal term, and any negotiations between the leaseholder and the freeholder. Unlike extending a lease, which typically involves paying a premium to the freeholder, renewing a lease generally involves paying a nominal fee known as a “peppercorn rent” or a small percentage of the property value.The exact cost of renewing a leasehold will depend on the specific terms agreed upon between the parties involved. It is advisable to consult with a solicitor or a licenced conveyancer who specialises in leasehold matters to get an accurate estimate of the costs involved based on your particular situation.

Q. How much does it cost to extend a leasehold in uk ?

The cost of extending a leasehold in the UK can range from a few thousand pounds to tens of thousands of pounds, depending on factors such as the remaining lease length, property value, and negotiated terms with the freeholder. Additional costs include legal fees, valuation fees, and disbursements such as Land Registry fees. It’s recommended to seek professional advice for an accurate estimate based on your specific situation.

The Extended Mortgage Guarantee Scheme

January 12, 2024

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Introduction

Navigating the ever-evolving landscape of property acquisition is a complex task, and staying informed about government-backed initiatives is crucial. In this blog, we unravel the intricacies of the extended Mortgage Guarantee Scheme, offering insights into its purpose, eligibility, and whether it’s your best route to securing a mortgage.

Understanding the Mortgage Guarantee Scheme

Introduced in April 2021, the Mortgage Guarantee Scheme aimed to facilitate homeownership by enabling buyers with a 5% deposit to purchase properties valued up to £600,000. The scheme, backed by the government, sought to revitalize the housing market post-pandemic by encouraging lenders to provide 5% deposit mortgages. Lenders participating in the scheme pay a fee for the government guarantee, mitigating potential losses in case of property repossession.

Extension of the Scheme

Originally scheduled to conclude in December 2022, the Mortgage Guarantee Scheme has undergone extensions. Initially prolonged until December 2023, the Chancellor further extended its duration in the 2023 Autumn Statement, pushing the scheme’s end date to June 2025.

How to Engage with the Mortgage Guarantee Scheme

Unlike traditional application processes, the Mortgage Guarantee Scheme does not entail a direct application by prospective homebuyers. Instead, it aims to incentivize lenders to offer 95% Loan-to-Value (LTV) deals. Although some lenders, like NatWest, have shifted away from the scheme, others, including Barclays, continue to provide details on eligibility criteria for 95% mortgages through the scheme.

Eligibility Criteria and Lender Variances

While the government sets a broad eligibility criterion for the scheme (applicable to houses under £600,000), individual lenders may impose additional criteria. For instance, Barclays restricts the use of the scheme for newly built properties and outlines borrowing limits for houses and flats. Buyers need to explore lender-specific conditions when considering the scheme.

Mortgage Lenders Offering 95% Mortgages

Leading financial institutions like Barclays, NatWest, and Lloyds Bank continue to offer mortgages for those with a 5% deposit. However, it’s crucial to note that interest rates may be higher compared to larger deposit options. For a detailed overview of the best first-time buyer mortgage rates, our regularly updated guide provides insights into rates for various deposit percentages.

Considerations Beyond the Mortgage Guarantee Scheme

While the scheme successfully increased the availability of 95% of mortgages, borrowers should prioritise individual mortgage terms, interest rates, and fees when selecting a deal. Exploring a 10% deposit may lead to more favourable terms and a broader range of mortgage products.

Exploring Alternatives and Future Schemes

Beyond the Mortgage Guarantee Scheme, the government offers various schemes, such as Shared Ownership, to assist homebuyers. Stay informed about evolving initiatives, including Skipton’s 100% mortgage for renters with a proven track record and ongoing updates to the affordable housing program.

Preparing for Buying a Home

For those not yet ready to buy, strategic steps include calculating an affordable budget, improving credit ratings, and exploring savings options like the Lifetime ISA for individuals under 40.

Looking for Lease Extension Or Freehold Purchase?

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Conclusion

As the Mortgage Guarantee Scheme continues to shape the landscape of property acquisition, understanding its nuances is crucial. Our blog serves as a comprehensive guide, providing valuable insights into eligibility, lender considerations, and alternative pathways to homeownership. Stay informed to make empowered decisions on your journey to owning a home.