The re-sale value of a leasehold property in Mile End depends on how many years the lease has left to run. If it is near to or fewer than eighty years you should expect difficulties on re-sale, so it is recommended to arrange for a lease extension before buying. Ideally one should start the process of extending the lease is when a lease still has 82 years to run so that all matters can be concluded in advance of the 80 year cut off point. Statute enables Mile End qualifying lessees to obtain a lease extension of 90 years in addition to the remaining lease term at a peppercorn rent (that is, rent free). The intention of the valuation is to arrive at an opinion of the amount payable by the lessee to the freeholder for the purchase of the lease extension.
It is conventional wisdom that a property with over one hundred years remaining is worth approximately the equivalent as a freehold. Where an further 90 years added to all but the shortest lease, the residence 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must also be not less than 75 years at the outset 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. |
The conveyancers that we work with undertake Mile End 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.
Off the back of protracted negotiations with the freeholder of her garden flat in Mile End, Elizabeth initiated the lease extension process as the eighty year deadline was swiftly advancing. The transaction completed in November 2008. The landlord’s charges were negotiated to about four hundred pounds.
Last Autumn we were e-mailed by Dr Stephanie Walker , who was assigned a lease of a basement apartment in Mile End in April 2000. The question was if we could estimate the premium would be to prolong the lease by 90 years. Comparable homes in Mile End with 100 year plus lease were in the region of £275,000. The average ground rent payable was £65 billed every twelve months. The lease ended on 6 June 2093. Taking into account 68 years remaining we approximated the compensation to the landlord to extend the lease to be within £12,400 and £14,200 exclusive of costs.
An example of a Freehold Enfranchisement case for a Mile End residence 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.