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Why you should start your Hook lease extension


Why you should start your Hook lease extension today:

A Hook lease depreciates with the years remaining on the lease.

The re-sale value of a leasehold property in Hook depends on how many years the lease has remaining. If it is close to or less than eighty years you should anticipate difficulties on re-sale, so it is advisable to arrange for the lease to be extended prior to purchasing. It is preferable to commence the lease extension process when the lease still has 82 years remaining so that a lease extension can be finalised prior to the 80 year cut off point. Current legislation enables Hook qualifying lessees to a ninety year extension added to their remaining lease term (ie if your lease has 50 years left the statutory lease extension will provide a new term of 140 years). The purpose of the valuation is to determine the premium payable by the lessee to the freeholder for the purchase of the lease extension.

An extended lease is almost the same value as a freehold

Leasehold premises in Hook with in excess of 100 years outstanding on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your property. In such situations there is often little to be gained by purchasing the freehold unless savings on ground rent and maintenance charges warrant it.

Lending institutions may decide not to grant a mortgage on a short lease

Many mortgage lenders insist on a lengthy amount of time left on any leasehold residence before they will consider it as adequate security. Regardless of whether you need a mortgage, you should bear in mind that it is reasonable to assume that someone intending to purchase your property in the future might well do, so in the event that they can't get a mortgage, then the market price of your property could be adversely impacted. In the last decade most mortgage lenders have increased the required minimum lease length that they are prepared to accept

Lender Requirement
Bank of Scotland 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.
National Westminster Bank Mortgage term plus 30 years.
The Mortgage Works Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:

Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer

New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer

Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.

SECOND HAND PROPERTIES

Unacceptable - advise Issuing Office (Will be declined):
- Unexpired lease term less than 70 years
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period less than or equal to 5 years

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than 85 years
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI

NEW BUILD PROPERTIES (includes office conversions)

Unacceptable - advise Issuing Office (will be declined):
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house
- Any lease which is subject to a ground rent (or annual rent) being charged which is more than on a peppercorn basis
- Any lease which is subject to a ground rent (or annual rent) being reviewed and altered on any review basis or methodology

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- A lease subject to a peppercorn ground rent (annual rent) charges

For the avoidance of doubt, any new build properties completed but not sold pre 30 June 2022 will only be acceptable if the lease conforms to the above guidance

* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years

LEASE EXTENSIONS

We require all lease extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where you become aware that it does not meet these requirements, please refer to the Issuing Office

Get in touch with one of our Hook lease extension solicitors or enfranchisement solicitors

Lease extensions in Hook can be a difficult process. We recommend you obtain professional help from a lawyer and valuer well versed in the legislation and lease extension process.

We provide you with an expert from a selection of lease extension solicitors, which ensures a targeted and efficient service as you have a dedicated port of call with an individual lawyer. Our lease extension solicitors have in-depth market knowledge procuring Hook lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.

Hook Lease Extension Case Studies:

Harrison, Hook, Hampshire

Last Christmas Harrison, came critically close to the eighty-year mark with the lease on his ground floor flat in Hook. In buying his flat 19 years previously, the lease term was of no importance. Thankfully, he became aware that he needed to take action soon on a lease extension. Harrison arranged for a lease extension just ahead of time last April. Harrison and the landlord who owned the flat above eventually agreed on sum of £5,500 . If he failed to meet the deadline, the premium would have increased by at least £900.

Hook case:

Mr and Mrs. T Lee took over the lease of a purpose-built flat in Hook in November 2008. We are asked if we could estimate the price would be for a ninety year lease extension. Similar premises in Hook with a long lease were in the region of £173,800. The average amount of ground rent was £65 invoiced quarterly. The lease lapsed in 2079. Considering the 55 years remaining we calculated the premium to the landlord for the lease extension to be within £31,400 and £36,200 exclusive of fees.

Decision in Kingston upon Thames

An example of a Lease Extension matter before the tribunal for a Hook property is Flat D 15 Claremont Gardens in September 2013. TheTribunal determined in accordance with section48 and Schedule13 of the Leasehold Reform,Housing and Urban Development Act 1993 that the premium for the extended lease should be fourteen thousand one hundred and eighty seven pounds (£14,187.00) This case affected 1 flat.