With a residential leasehold premises in Herne Hill, you are actually purchasing an entitlement to live in a property for a prescribed time frame. These days flat leases typically tend to be for 99 years or 125. Many leasehold owners are unconcerned as this seems like a long period of time, you may think about a lease extension sooner rather than later. The general rule is that the shorter the lease is the cost of extending the lease increases markedly especially when there are less than 80 years remaining. Leasehold owners in Herne Hill with a lease drawing near to 81 years unexpired should seriously think of extending it as soon as possible. Once the lease term has below eighty years left, under the current Act the freeholder can calculate and demand a larger premium, assessed on a technical multiplication, strangely termed as “marriage value” which is payable.
It is conventional wisdom that a residential leasehold with more than 100 years unexpired lease term is worth approximately the equivalent as a freehold. Where an further 90 years added to any lease with more than 35 years left, the residence will be equivalent in value to a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Regardless of whether you are a tenant or a freeholder in Herne Hill,the lease extension lawyers that we work with will always be happy to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Herne Hill valuers.
Last October Ali, came critically close to the 80-year mark with the lease on his first floor flat in Herne Hill. Having purchased his property two decades ago, the lease term was of little relevance. Luckily, he became aware that he would soon be paying way over the odds for Extending the lease. Ali arranged for a lease extension just under the wire in June. Ali and the landlord who owned the flat above ultimately settled on a premium of £5,000 . If the lease had gone to less than eighty years, the amount would have escalated by a minimum £1,100.
In 2012 we were approached by Ms K Torres who, having took over the lease of a garden apartment in Herne Hill in July 2009. We are asked if we could estimate the price could be for a 90 year extension to my lease. Identical premises in Herne Hill with an extended lease were valued around £191,400. The average amount of ground rent was £55 billed monthly. The lease terminated on 1 November 2079. Having 54 years remaining we calculated the premium to the freeholder for the lease extension to be within £34,200 and £39,600 exclusive of fees.
An example of a Freehold Enfranchisement matter before the tribunal for a Herne Hill flat 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 related to 3 flats. The unexpired residue of the current lease was 72.58 years.