It’s a harsh truth that a Greenford residential lease is a deteriorating asset. The lease value drops in proportion to its lease length. The extent of this is not fully appreciated in the early years due to the depreciation being disguised by increases in the Greenford property market.Once your lease gets to 85ish years, you need to start considering a lease extension. If lease term dips below 80 years, you will end up paying 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. The marriage fee is the amount of additional value that a lease extension will add the property The majority of leasehold owners in Greenford will be able to extend under the legislation; however a conveyancer should be able to confirm whether you qualify for an extension. In some situations you may not be entitled. There are also strict timetables and procedures to be adhered to once the process has commenced and you will need to be guided by your conveyancing solicitor for the duration of the process.
It is conventional wisdom that a residential leasehold with over 100 years remaining is worth approximately the same as a freehold. Where an additional ninety years added to all but the shortest lease, the residence will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| 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. |
| Lloyds TSB Scotland | 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. |
| 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 conveyancing solicitors that we work with handle Greenford 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.
Half a year ago Luca, started to get close to the 80-year threshold with the lease on his leasehold apartment in Greenford. Having bought his property two decades ago, the length of the lease was of no interest. Thankfully, he recognised he would soon be paying an escalated premium for Extending the lease. Luca was able to extend his lease just under the wire last May. Luca and the freeholder via the management company ultimately agreed on a premium of £5,500 . If the lease had slid below eighty years, the figure would have become more exhorbitant by at least £900.
In 2011 we were e-mailed by Mr O Clarke who, having purchased a ground floor flat in Greenford in August 2007. The question was if we could approximate the price could be for a ninety year lease extension. Comparative flats in Greenford with 100 year plus lease were in the region of £280,000. The average ground rent payable was £55 collected quarterly. The lease concluded in 2102. Having 77 years outstanding we approximated the premium to the landlord to extend the lease to be within £13,300 and £15,400 not including fees.
An example of a lease Extension matter before the tribunal for a Greenford flat is 25 Beechwood Avenue in November 2012. the Tribunal accordingly determined that the premium for the lease extension should be £24,353. This case was in relation to 1 flat. The remaining number of years on the lease was 58.19 years.