Unfortunately that a Herne Hill residential lease is a wasting asset. The lease value reduces in proportion to its lease length. The extent of this is taken for granted in the early years due to the reduction being disguised by increases in the Herne Hill property prices.Where your lease has approximately ninety years left, you should start thinking about a lease extension. If lease term dips under eighty years, you will then be required to pay half of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of extra value that a lease extension will add the property The majority of leasehold owners in Herne Hill will be able to extend under the legislation; however a conveyancer should be able to confirm if you are eligibility. In some cases you may not qualify. There are also strict deadlines and procedures to follow once the process has commenced and you will need to be guided by your conveyancer from beginning to end of the process.
It is generally accepted that a residential leasehold with in excess of 100 years remaining is worth roughly the equivalent 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 |
|---|---|
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| 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 conveyancers that we work with procure Herne Hill 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.
Jamie was the the leasehold proprietor of a high value apartment in Herne Hill being sold with a lease of fraction over 72 years remaining. Jamie informally contacted his freeholder being a well known Bristol-based freehold company and enquired on a premium to extend the lease. The landlord indicated a willingness to grant an extension taking the lease to 125 years subject to a new rent initially set at £100 per annum and doubled every 25 years thereafter. No ground rent would be payable on a lease extension were Jamie to exercise his statutory right. Jamie procured expert legal guidance and secured an acceptable deal without going to tribunal and ending up with a market value flat.
In 2012 we were contacted by Mr S Richardson who, having took over the lease of a newly refurbished flat in Herne Hill in April 1999. The question was if we could estimate the compensation to the landlord could be to prolong the lease by an additional years. Comparative homes in Herne Hill with a long lease were worth £216,000. The average ground rent payable was £60 billed monthly. The lease ran out in 2083. Given that there were 58 years remaining we approximated the compensation to the landlord for the lease extension to be within £28,500 and £33,000 exclusive of expenses.
An example of a Freehold Enfranchisement case for a Herne Hill property is 66 Southwell Road in March 2012. By Order of Deputy District Judge Stone dated 25 January 2012 a vesting order was made. The determination of the purchase price was referred to the Tribunal who decided that the amount payable for the freehold should be£29,612.00 This case affected 3 flats. The unexpired residue of the current lease was 72.58 years.