The re-sale value of a leasehold property in New Malden is impacted by how many years the lease has remaining. If it is close to or less than 80 years you should anticipate difficulties on re-sale, so it is advisable to arrange for a lease extension before buying. Ideally one should start the lease extension process when the lease still has 82 years to run so that all matters can be finalised prior to the 80 year cut off point. Statute entitles New Malden qualifying lessees to acquire a lease extension of ninety years on top of the remaining length of the lease at a peppercorn rent (that is, rent free). The intention of the valuation is to determine the sum payable by the lessee to the freeholder for the acquisition of the lease extension.
Leasehold residencies in New Malden with over one hundred years unexpired on the lease are often referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such situations there is often little upside in purchasing the freehold unless savings on ground rent and estate charges merit 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| 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. |
Irrespective of whether you are a tenant or a freeholder in New Malden,the lease extension solicitors that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with New Malden valuers.
Two years ago Tyler, started to get close to the 80-year threshold with the lease on his studio flat in New Malden. In buying his home 19 years ago, the lease term was of little concern. Thankfully, he recognised he needed to take action soon on a lease extension. Tyler was able to extend his lease at the eleventh hour last March. Tyler and the landlord who owned the flat above eventually agreed on a premium of £5,500 . If the lease had fallen lower than 80 years, the premium would have become more costly by at least £925.
Last year we were e-mailed by Ms Lydia Lambert , who purchased a one bedroom flat in New Malden in July 2006. The dilemma was if we could approximate the compensation to the landlord would be for a ninety year extension to my lease. Comparable properties in New Malden with 100 year plus lease were valued around £261,600. The average amount of ground rent was £60 billed per annum. The lease came to a finish in 2078. Taking into account 52 years remaining we estimated the premium to the freeholder to extend the lease to be within £39,000 and £45,000 plus legals.
An example of a Lease Extension matter before the tribunal for a New Malden flat is Flat D 15 Claremont Gardens in September 2013. TheTribunal determined in accordance with section48 and Schedule13 of the Leasehold Reform,Housing and Urban Development Act 1993 that the premium for the extended lease should be fourteen thousand one hundred and eighty seven pounds (£14,187.00) This case affected 1 flat.