It’s a harsh truth that a Mile End residential lease is a deteriorating asset. The lease value drops in proportion to its lease length. The extent of this is taken for granted in the early years due to the deflation being disguised by increases in the Mile End property prices.Once your lease nears 85ish years, you need to start thinking about 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 premium will be due. The majority of leasehold owners in Mile End will be able to extend under the legislation; however a conveyancing solicitor will be able to confirm whether 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 is initiated and you will need to be guided by your conveyancer from beginning to end of the formalities.
It is generally considered that a property with more than 100 years unexpired lease term 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 ahead.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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. |
| Halifax | Minimum 70 years from the date 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. |
| 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. |
Regardless of whether you are a tenant or a freeholder in Mile End,the lease extension solicitors 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.
Following lengthy correspondence with the landlord of her two bedroom apartment in Mile End, Alexandra initiated the lease extension process as the eighty year mark was fast advancing. The lease extension was finalised in October 2008. The landlord’s fees were restricted to below 650 pounds.
Last Autumn we were e-mailed by Mr and Mrs. S White , who completed a purpose-built apartment in Mile End in July 1998. We are asked if we could shed any light on how much (roughly) premium would be to prolong the lease by 90 years. Identical flats in Mile End with 100 year plus lease were worth £200,000. The mid-range ground rent payable was £50 collected every twelve months. The lease came to a finish on 23 October 2103. Given that there were 77 years as a residual term we estimated the premium to the landlord to extend the lease to be within £8,600 and £9,800 exclusive of fees.
An example of a Freehold Enfranchisement case 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.