Downe leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of the lease becomes more expensive. It is the case that most Downe tenants have the right to extend their lease by an additional ninety years by virtue of the 1993 Leasehold Reform Act. Where you are a leasehold owner in Downe you must see if your lease has between 70 and 90 years left. In particular once the remaining lease term slips under 80 years, the cost of any lease extension sharply increases as part of the premium you pay is what is known as a marriage value
It is conventional wisdom that a residential leasehold with more than 100 years unexpired lease term is worth approximately the equivalent as a freehold. Where an further 90 years added to any lease with more than 45 years left, the property will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| 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.
Harrison owned a studio apartment in Downe on the market with a lease of a little over 61 years left. Harrison informally approached his landlord being a well known local-based freehold company and enquired on a premium to extend the lease. The freeholder indicated a willingness to extend the lease to 125 years on the basis of a rise in the rent to £50 per annum. No ground rent would be payable on a lease extension were Harrison to invoke his statutory right. Harrison procured expert legal guidance and was able to make an informed judgement and handle with the matter and ending up with a market value flat.
Last month we were approach by Dr V Vincent , who took over the lease of a first floor apartment in Downe in June 1997. We are asked if we could shed any light on how much (approximately) premium could be for a ninety year lease extension. Comparable premises in Downe with an extended lease were valued about £290,000. The mid-range amount of ground rent was £45 invoiced quarterly. The lease ended on 21 July 2098. Given that there were 73 years left we estimated the compensation to the freeholder to extend the lease to be within £9,500 and £11,000 exclusive of expenses.
An example of a Lease Extension decision 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 related to 1 flat. The remaining number of years on the lease was 50.57 years.