Owning a flat usually means owning a lease of the property, this is a ‘time-limited’ interest becoming shorter every day. The lease will usually be granted for a fixed period of time , ordinarily 99 or 125 years, although we have seen longer and shorter terms in Eltham. Inevitably, the term of lease remaining shortens over time. This is often ignored and only becomes a problem when the property has to be disposed of or re-mortgaged. The shorter the lease the less it is worth and the more expensive it will be to obtain a lease extension. Qualifying long lease owners in Eltham have the right to extend the lease for an additional 90 years under legislation. You should give careful attention before delaying your Eltham lease extension. Holding off that expense now only increases the price you will ultimately incur to extend your lease
It is conventional wisdom that a residential leasehold with more than one hundred years unexpired lease term is worth approximately the same as a freehold. Where an further 90 years added to all but the shortest lease, the residence 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; |
| Chelsea 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Retaining our service will provide you increased control over the value of your Eltham leasehold, as your property will be more valuable and saleable in respect of lease length should you wish to sell. The conveyancers that we work with have a in-depth market knowledge handling many hundreds of lease extensions or freehold purchase transactions.
Kyle owned a 2 bedroom flat in Eltham being marketed with a lease of a few days over fifty eight years outstanding. Kyle on an informal basis approached his landlord being a well known local-based freehold company for a lease extension. The landlord was keen to give an extension on non-statutory terms taking the lease to 125 years on the basis of a new rent at the outset set at £150 per annum and doubled every 25 years thereafter. Ordinarily, ground rent would not be due on a lease extension were Kyle to invoke his statutory right. Kyle obtained expert advice and secured satisfactory resolution without resorting to tribunal and ending up with a market value flat.
Mr and Mrs. S Kelly moved into a ground floor apartment in Eltham in September 1999. We are asked if we could shed any light on how much (roughly) price would likely be for a 90 year extension to my lease. Identical premises in Eltham with 100 year plus lease were valued about £250,400. The mid-range amount of ground rent was £65 invoiced quarterly. The lease finished in 2090. Given that there were 64 years left we approximated the premium to the landlord for the lease extension to be within £19,000 and £22,000 plus legals.
An example of a Lease Extension matter before the tribunal for a Eltham residence is 103a Footscray Road in January 2014. The tribunal determines that the premium payable for the extended lease should be £34,500 according to the expert witness valuation calculation This case was in relation to 1 flat.