Mile End leases on residential properties are gradually decreasing in 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. It is the case that most Mile End tenants have the right to extend their lease by an additional 90 years under the 1993 Leasehold Reform Act. If you are a leasehold owner in Mile End you must check if your lease has between 70 and 90 years left. In particular once the remaining lease term slips under eighty years, the cost of any lease extension sharply increases as an element of the premium you will incur is what is known as a marriage value
Leasehold premises in Mile End with in excess of one hundred years unexpired on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your home. In such situations there is often little to be gained by purchasing the reversionary interest unless savings on ground rent and service charges warrant it.
| 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. |
| 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. |
| Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
Irrespective of whether you are a tenant or a landlord in Mile End,the lease extension experts that we work with will always be prepared to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Mile End valuers.
Aarav owned a conversion apartment in Mile End being sold with a lease of fraction over 59 years unexpired. Aarav informally spoke with his landlord being a well known Bristol-based freehold company for a lease extension. The landlord indicated a willingness to extend the lease to 125 years on the basis of an increased rent to £125 annually. Ordinarily, ground rent would not be payable on a lease extension were Aarav to invoke his statutory right. Aarav procured expert advice and secured satisfactory deal without going to tribunal and readily saleable.
Last Autumn we were e-mailed by Mr and Mrs. D François , who acquired a garden apartment in Mile End in January 2007. We are asked if we could approximate the compensation to the landlord would likely be to prolong the lease by 90 years. Comparative homes in Mile End with an extended lease were worth £205,000. The average amount of ground rent was £50 invoiced every twelve months. The lease lapsed in 2104. Having 79 years as a residual term we calculated the compensation to the freeholder for the lease extension to be within £8,600 and £9,800 plus costs.
An example of a Freehold Enfranchisement decision for a Mile End flat is 26 Rhondda Grove in June 2009. The net price payable by the leaseholders as determined by the Tribunal was £3,015.13. This comprised £11,300 premium for the reversion less £8,284.87 costs as ordered by the County Court.