It’s an underpublicised truth that a Mile End residential lease is a wasting asset. The lease value drops in proportion to its lease length. The extent of this is taken for granted in the first few years due to the depreciation being disguised by increases in the Mile End property prices.Where your lease has approximately 90 years left, you should start thinking about a lease extension. If lease term drops under eighty years, you will end up paying 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of additional value that a lease extension will add the property The majority of leasehold owners in Mile End will be able to extend under the legislation; however a conveyancing solicitor will be able to clarify if you qualify for an extension. In some situations you may not be entitled. There are also strict timeframes and procedures to be adhered to once the process is instigated and you will need to be guided by your conveyancer from beginning to end of the process.
Leasehold premises in Mile End with more than one hundred years remaining on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such situations there is often little upside in buying the freehold unless savings on ground rent and maintenance charges justify 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. |
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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; |
| 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| 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 |
Engaging our service gives you better control over the value of your Mile End leasehold, as your property will be more valuable and marketable in relation to the lease length should you wish to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
In recent months Stanley, came dangerously near to the eighty-year mark with the lease on his studio flat in Mile End. In buying his home two decades ago, the unexpired term was of little relevance. by good luck, he realised he needed to take action soon on a lease extension. Stanley arranged for a lease extension just under the wire last March. Stanley and the freeholder via the managing agents subsequently agreed on the final figure of £5,500 . If the lease had slid to less than 80 years, the price would have increased by a minimum £950.
Last Autumn we were called by Dr B Rogers , who was assigned a lease of a one bedroom flat in Mile End in January 2002. The question was if we could approximate the price would likely be to extend the lease by a further 90 years. Similar residencies in Mile End with 100 year plus lease were valued about £191,400. The mid-range amount of ground rent was £55 collected per annum. The lease terminated on 12 September 2080. Taking into account 54 years outstanding we estimated the premium to the freeholder for the lease extension to be within £34,200 and £39,600 exclusive of professional charges.
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.