The value of Balham leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The cost of extending the lease can escalate significantly once the remaining term is less than eighty years
It is conventional wisdom that a residential leasehold with over 100 years remaining is worth roughly the equivalent as a freehold. Where an further ninety years added to all but the shortest lease, the property will be worth the same as a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Godiva Mortgages | 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
| 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 conveyancers that we work with undertake Balham 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.
Callum was the the leasehold proprietor of a studio flat in Balham being sold with a lease of a few days over 59 years remaining. Callum on an informal basis contacted his freeholder a well known Manchester-based freehold company for a lease extension. The landlord indicated a willingness to grant an extension taking the lease to 125 years on the basis of a new rent initially set at £100 per annum and increase every 25 years thereafter. No ground rent would be payable on a lease extension were Callum to invoke his statutory right. Callum obtained expert advice and was able to make an informed decision and deal with the matter and sell the property.
In 2013 we were e-mailed by Mr F Petit who, having moved into a garden apartment in Balham in April 2003. The dilemma was if we could estimate the compensation to the landlord could be for a ninety year lease extension. Identical flats in Balham with an extended lease were valued about £261,600. The average ground rent payable was £60 collected monthly. The lease finished on 28 May 2077. Having 52 years left we approximated the compensation to the landlord for the lease extension to be between £39,000 and £45,000 not including fees.
An example of a Lease Extension decision for a Balham premises is First Floor Flat 152a Ramsden Road in June 2009. The net result of the tribunals calculation produced a premium payable of £23,975. This case affected 1 flat. The unexpired lease term was 56.67 years.