When it comes to long leasehold property in Eltham, you are in fact renting it for a certain amount of time. These days flat leases are usually granted for 99 years or 125. Many leasehold owners are unconcerned as this seems like a lengthy period of time, you may consider extending the lease sooner as opposed to later. The general rule is that the shorter the number of years is the cost of extending the lease increases markedly especially once there are fewer than eighty years left. Anyone in Eltham with a lease approaching 81 years remaining should seriously consider extending it sooner as opposed to later. When the lease term has under 80 years left, under the current legislation the freeholder is entitled to calculate and levy a greater amount, assessed on a technical calculation, strangely termed as “marriage value” which is payable.
It is conventional wisdom that a property with over 100 years remaining is worth roughly the same as a freehold. Where an additional ninety years added to all but the shortest lease, the premises will be equivalent in value to a freehold for decades to come.
Lender | Requirement |
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Bank of Scotland | Minimum 70 years from the date of the mortgage. |
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. |
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. |
Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Using our service will provide you better control over the value of your Eltham leasehold, as your property will be more valuable and marketable in terms of lease length should you wish to sell. The conveyancers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Last October Finley, came critically near to the eighty-year mark with the lease on his one bedroom flat in Eltham. Having bought his property twenty years ago, the unexpired term was of little concern. Fortunately, he realised he would soon be paying way over the odds for a lease extension. Finley extended the lease just under the wire in August. Finley and the landlord subsequently agreed on sum of £5,500 . If the lease had dipped below eighty years, the premium would have become more costly by at least £925.
Last Summer we were approach by Dr Edward Sánchez , who moved into a first floor flat in Eltham in June 2006. We are asked if we could estimate the compensation to the landlord would likely be for a ninety year lease extension. Comparable properties in Eltham with a long lease were valued around £200,000. The mid-range amount of ground rent was £50 collected annually. The lease ran out on 1 October 2101. Taking into account 77 years as a residual term we approximated the compensation to the landlord for the lease extension to be between £8,600 and £9,800 not including legals.
An example of a Lease Extension decision for a Eltham property 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 affected 1 flat.