It’s an underpublicised truth that a Homerton 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 first few years due to the loss of value being disguised by increases in the Homerton property prices.Where your lease has approximately ninety years left, you should start considering a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease slips below 80 years - otherwise a higher amount will be payable. The majority of leasehold owners in Homerton will be able to extend under the legislation; however a lawyer will be able to confirm if you are eligibility. In some cases you may not be entitled. There are also strict deadlines and procedures to be adhered to once the process has commenced and you will need to be guided by your conveyancer for the duration of the process.
It is conventional wisdom that a residential leasehold with in excess of one hundred years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional 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 |
|---|---|
| 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; |
| 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. |
| 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. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Irrespective of whether you are a tenant or a landlord in Homerton,the lease extension experts that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Homerton valuers.
In 2014 Aiden, started to get close to the 80-year threshold with the lease on his ground floor flat in Homerton. In buying his flat two decades ago, the length of the lease was of minimal relevance. As luck would have it, he became aware that he needed to take action soon on a lease extension. Aiden arranged for a lease extension just in the nick of time last January. Aiden and the landlord who owned the flat above ultimately agreed on the final figure of £5,000 . If the lease had dipped to less than 80 years, the premium would have become more costly by a minimum £1,050.
Last year we were phoned by Mr and Mrs. J Nelson , who was assigned a lease of a purpose-built flat in Homerton in September 2009. We are asked if we could approximate the compensation to the landlord would likely be for a ninety year lease extension. Comparable flats in Homerton with an extended lease were in the region of £176,200. The average amount of ground rent was £65 invoiced monthly. The lease elapsed in 2081. Having 56 years as a residual term we calculated the premium to the landlord to extend the lease to be within £29,500 and £34,000 exclusive of legals.
An example of a Freehold Enfranchisement decision for a Homerton flat is 104 Nightingale Road in May 2009. The Tribunal's Decision is that the premium torbe paid for the enfranchisement in this case is £112,174 This case was in relation to 10 flats. The unexpired term as at the valuation date was 71.25 years.