Mitcham leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of the lease becomes more expensive. The majority of owners of residential leasehold property in Mitcham enjoy rights under legislation to extend the terms of their leases. If you are a leasehold owner in Mitcham you would be well advised to investigate if your lease has between 70 and ninety years remaining. There are compelling reasons why a Mitcham leaseholder with a lease having around 80 years unexpired should take steps to make sure that a lease extension is effected without delay
Leasehold premises in Mitcham with more than 100 years outstanding on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such situations there is often little to be gained by purchasing the freehold unless savings on ground rent and maintenance charges merit it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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; |
| Birmingham Midshires | 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
The conveyancing solicitors that we work with handle Mitcham 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 conveyancer we work with provide it.
Isaac owned a 2 bedroom apartment in Mitcham being sold with a lease of fraction over fifty eight years left. Isaac on an informal basis approached his freeholder a well known local-based freehold company and enquired on a premium to extend the lease. The freeholder was prepared to grant an extension on non-statutory terms taking the lease to 125 years subject to a new rent at the outset set at £200 per annum and increase every twenty five years thereafter. No ground rent would be payable on a lease extension were Isaac to invoke his statutory right. Isaac procured expert legal guidance and secured satisfactory resolution informally and ending up with a market value flat.
In 2009 we were approached by Mr Archie López who, having took over the lease of a recently refurbished flat in Mitcham in October 2012. The dilemma was if we could estimate the premium would be for a 90 year lease extension. Similar properties in Mitcham with 100 year plus lease were valued around £166,800. The mid-range ground rent payable was £50 billed quarterly. The lease ended on 22 August 2076. Considering the 50 years remaining we calculated the premium to the landlord for the lease extension to be between £32,300 and £37,400 exclusive of expenses.
An example of a Freehold Enfranchisement matter before the tribunal for a Mitcham residence is 50 & 52 Southcroft Road in September 2013. The tribunals own valuation determined that the premium payable should be £29,000 This case was in relation to 2 flats. The remaining number of years on the lease was 86.11 and 60.64.