Hackney leases on residential properties are gradually decreasing in 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 Hackney tenants have the right to extend their lease by an additional 90 years under the 1993 Leasehold Reform Act. If you are a leasehold owner in Hackney you really ought to investigate if your lease has between seventy and 90 years left. In particular once the remaining lease term slips under eighty years, the premium due on any lease extension increases dramatically as an element of the premium you will incur is what is known as a marriage value
It is generally considered that a property with more than 100 years remaining is worth roughly the equivalent as a freehold. Where an further 90 years added to all but the shortest lease, the premises will be worth the same as a freehold for many years in the future.
| 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 should be declined (see exception below). Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office. 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; |
| Birmingham Midshires | 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
Engaging our service will provide you increased control over the value of your Hackney leasehold, as your property will be more valuable and marketable in respect of lease length should you decide to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
After lengthy negotiations with the landlord of her basement flat in Hackney, Melissa started the lease extension process just as her lease was coming close to the critical 80-year threshold. The legal work was finalised in January 2011. The freeholder’s charges were kept to an absolute minimum.
Mr Dexter Lefebvre completed a garden apartment in Hackney in March 2008. We are asked if we could shed any light on how much (roughly) premium could be for a 90 year extension to my lease. Identical properties in Hackney with a long lease were worth £213,600. The mid-range ground rent payable was £60 invoiced monthly. The lease end date was in 2082. Considering the 57 years as a residual term we approximated the premium to the landlord for the lease extension to be within £30,400 and £35,200 plus legals.
An example of a Freehold Enfranchisement case for a Hackney residence is 150 Amhurst Road in December 2013. The tribunal concluded that the premium to be paid by the applicant for the enfranchisement of the subject property was £43,500. This case was in relation to 4 flats. The unexpired term was 90 (or thereabouts).