The market value of a leasehold property in Mile End is impacted by how many years the lease has remaining. If it is close to or fewer than 80 years you should expect problems on re-sale, so it is recommended to arrange for a lease extension prior to purchasing. Ideally one should start the lease extension process when the lease still has 82 years to run so that a lease extension can be concluded in advance of the 80 year mark. Statute enables Mile End qualifying lessees to a ninety year extension added to their residual lease term (ie if your lease has 50 years left the statutory lease extension will provide a new term of 140 years). The purpose of the valuation is to determine the sum payable by the lessee to the freeholder for the purchase of the lease extension.
Leasehold properties in Mile End with over one hundred years remaining on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such circumstances there is often little to be gained by buying the reversionary interest unless savings on ground rent and maintenance charges warrant it.
| Lender | Requirement |
|---|---|
| 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. |
| 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. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The conveyancers that we work with procure 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.
Sam was the the leasehold owner of a studio apartment in Mile End being sold with a lease of fraction over 61 years left. Sam on an informal basis approached his freeholder being a well known Bristol-based freehold company for a lease extension. The freeholder was keen to give an extension on non-statutory terms taking the lease to 125 years on the basis of a rise in the rent to £200 per annum. No ground rent would be payable on a lease extension were Sam to exercise his statutory right. Sam obtained expert advice and secured satisfactory deal without going to tribunal and ending up with a market value flat.
Mr I Patel acquired a ground floor apartment in Mile End in May 2004. We are asked if we could approximate the compensation to the landlord would likely be to extend the lease by a further 90 years. Comparative residencies in Mile End with 100 year plus lease were in the region of £280,000. The average ground rent payable was £45 collected monthly. The lease terminated in 2095. Given that there were 69 years left we approximated the premium to the landlord to extend the lease to be between £12,400 and £14,200 exclusive of legals.
An example of a Freehold Enfranchisement case for a Mile End property 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.