Kennington leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of the lease gets more expensive. Legislation has been in place for sometime now allowing qualifying Kennington residential leaseholders to extend the terms of long leases. If you are a leasehold owner in Kennington you would be well advised to check if your lease has between 70 and ninety years remaining. In particular once the remaining lease term slips under 80 years, the cost of any lease extension increases dramatically as an element of the premium you will incur is what is known as a marriage value
It is conventional wisdom that a property with more than one hundred years remaining is worth roughly the same as a freehold. Where an further ninety years added to all but the shortest lease, the property will be worth the same as 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; |
Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
Coventry Building Society | 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. |
Halifax | Minimum 70 years from the date of the mortgage. |
National Westminster Bank | Mortgage term plus 30 years. |
The conveyancing solicitors that we work with undertake Kennington 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 conveyancing solicitor we work with provide it.
Reuben was the the leasehold owner of a high value apartment in Kennington on the market with a lease of just over 59 years remaining. Reuben informally approached his freeholder a well known Manchester-based freehold company for a lease extension. The freeholder indicated a willingness to grant an extension taking the lease to 125 years subject to an increased rent to £200 annually. Ordinarily, ground rent would not be due on a lease extension were Reuben to invoke his statutory right. Reuben procured expert advice and secured an acceptable deal without going to tribunal and sell the property.
Last Christmas we were called by Mr Caleb Pérez , who took over the lease of a one bedroom flat in Kennington in October 2001. The dilemma was if we could approximate the price would likely be to prolong the lease by a further 90 years. Identical homes in Kennington with an extended lease were worth £260,200. The mid-range amount of ground rent was £65 billed monthly. The lease finished on 15 August 2090. Having 66 years as a residual term we calculated the compensation to the landlord to extend the lease to be between £14,300 and £16,400 not including fees.
An example of a Lease Extension matter before the tribunal for a Kennington residence is Ground Floor Flat 39 Bronsart Road in May 2010. Following a vesting order by West London County Court the Leasehold Valuation Tribunal concluded that the price to be paid for the extended lease of the premises was Thirteen Thousand Two hundred pounds (£13,200) in accordance with the valuation. The extended lease was granted for a term of 90 years from the expiry date of the Lease and at a peppercorn ground rent from the date of the vesting order. This case affected 1 flat. The remaining number of years on the lease was 74.77 years.