If you are facing a significant premium because your lease in Hornchurch has dropped toward the 80-year mark, your previous lawyer may be at fault. Our panel of experts specialise in recovering lease extension costs from negligent firms who failed to protect your investment.
Main reasons to commence your Hornchurch lease extension today:
Increase your lease and increase your Hornchurch property value
The market value of a leasehold property in Hornchurch depends on how many years the lease has remaining. If it is close to or less than 80 years you should foresee problems on re-sale, so it is advisable to arrange for the lease to be extended prior to buying. It is preferable to commence the lease extension process when a lease still has 82 years unexpired so that formalities can be concluded well before the 80 year mark. Leasehold Reform legislation entitles Hornchurch qualifying lessees to an additional term of 90 years on top of the existing term, at a notional rent (no ground rent). The purpose of the valuation is to determine the premium payable by the lessee to the freeholder for the acquisition of the lease extension.
An extended lease has roughly the same value as a freehold
It is generally accepted that a residential leasehold with in excess of 100 years unexpired lease term is worth roughly the same as a freehold. Where an further 90 years added to all but the shortest lease, the premises will be equivalent in value to a freehold for many years in the future.
Lending institutions will not finance a property with a short lease
The definition of a short lease depends on the specific mortgage company, yet lending institutions start to become nervous at around 75 years. This may cause difficulties as and when you come to sell or refinance your property as it will be practically unmortgageable. Even though you might have no imminent intention to sell but when you do your purchaser will have to wait a couple of years before being able to initiate the legal procedures for an extension to the lease.
| 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.
|
| 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.
|
| TSB |
Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption.
|
| 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 a proposed Lease Extension does not meet these requirements, however you feel that this is in the best interest for our mutual client, please refer all details to the Issuing Office for us to consider.
Please ensure that all lender enquiries are submitted (with full documentation/requirements) at least 2 weeks prior to exchange to allow sufficient time for review and decisioning.
|
| 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.
|
Get in touch with one of our Hornchurch lease extension solicitors or enfranchisement solicitors
Using our service gives you better control over the value of your Hornchurch leasehold, as your property will be more valuable and marketable in terms of lease length should you want to sell.
The lawyers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Hornchurch Lease Extension Case Summaries:
Harvey, Hornchurch, London,
Harvey owned a high value flat in Hornchurch on the market with a lease of fraction over 59 years remaining. Harvey informally contacted his landlord being a well known local-based freehold company and enquired on a premium to extend the lease. The freeholder was keen to grant an extension on non-statutory terms taking the lease to 125 years subject to a new rent to start with set at £200 per annum and doubled every twenty five years thereafter. Ordinarily, ground rent would not be due on a lease extension were Harvey to exercise his statutory right. Harvey obtained expert legal guidance and was able to make an informed judgement and deal with the matter and readily saleable.
Hornchurch case:
Mrs Mia Petit owned a ground floor flat in Hornchurch in August 2004. We are asked if we could approximate the compensation to the landlord would be to prolong the lease by 90 years. Similar homes in Hornchurch with a long lease were in the region of £267,600. The average ground rent payable was £65 billed per annum. The lease finished on 19 January 2093. Considering the 67 years outstanding we calculated the compensation to the landlord to extend the lease to be between £14,300 and £16,400 exclusive of legals.
Decision in Havering
An example of a Lease Extension case for a Hornchurch flat is
37 Lodge Court High Street in November 2013. the decision of the LVT was that the premium to be paid for the new lease was £25,559
This case affected 1 flat. The unexpired term as at the valuation date was 57.5 years.