The re-sale value of a leasehold property in Downe is impacted by how long the lease has left to run. If it is close to or less than eighty years you should expect problems on re-sale, so it is recommended to arrange for the lease to be extended prior to buying. It is preferable to start the process of extending the lease is when a lease still has 82 years remaining so that formalities can be addressed ahead of the eighty year cut off point. Current legislation entitles Downe qualifying lessees to acquire a new lease which will be for the balance of the existing lease plus a supplemental term of ninety years. The intention of the valuation is to determine the sum payable by the lessee to the freeholder for the acquisition of the lease extension.
Leasehold properties in Downe with in excess of one hundred years unexpired on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your property. In such situations there is often little to be gained by buying the reversionary interest unless savings on ground rent and maintenance charges justify it.
| 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 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; |
| 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
The conveyancing solicitors that we work with undertake Downe 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.
Off the back of protracted discussions with the landlord of her purpose-built flat in Downe, Jade commenced the lease extension process just as her lease was nearing the crucial 80-year threshold. The legal work completed in October 2006. The landlord’s charges were negotiated to about 650 pounds.
In 2010 we were phoned by Mr T Petit who, having moved into a one bedroom flat in Downe in February 2007. The question was if we could shed any light on how much (roughly) premium could be to extend the lease by an additional years. Identical premises in Downe with a long lease were worth £198,800. The mid-range ground rent payable was £55 collected every twelve months. The lease ran out on 22 February 2081. Given that there were 55 years remaining we estimated the premium to the freeholder to extend the lease to be between £33,300 and £38,400 exclusive of legals.
An example of a Lease Extension case for a Downe residence is 1 Southlands Court Southlands Road in September 2013. The Leasehold Valuation Tribunal determined that the premium to be paid by the tenant on the grant of a new lease, in accordance with section 56 and Schedule 13 of the Leasehold Reform, Housing and Urban Development Act 1993 was £30,541 This case affected 1 flat. The unexpired term was 50.57 years.