It’s an underpublicised truth that a Newham residential lease is a deteriorating asset. As the lease term reduces so does the value of the property. The extent of this is not fully appreciated in the first few years due to the deflation being disguised by increases in the Newham property prices.Once your lease nears 85ish years, you should start considering a lease extension. If the number of years remaining falls below eighty years, you will then be required to pay half of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. The marriage fee is the amount of additional value that a lease extension will add the property Most flat owners in Newham will be able to extend under the legislation; however a lawyer should be able to clarify if you are eligibility. In some cases you may not be entitled. There are also strict deadlines and procedures to follow once the process is instigated and you will need to be guided by your lawyer for the duration of the process.
It is conventional wisdom that a property with over 100 years remaining is worth approximately the equivalent as a freehold. Where an additional ninety years added to all but the shortest lease, the residence will be worth the same as a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage should be declined (see exception below). Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office. 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. |
| 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. |
Lease extensions in Newham can be a difficult process. We recommend you obtain guidance from a lawyer and surveyor well versed in the legislation and lease extension process.
We provide you with an expert from a selection of lease extension solicitors, which ensures a targeted and efficient service as you have a dedicated port of call with an individual lawyer. Our lease extension solicitors have in-depth market knowledge dealing with Newham lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.
During the course of the last few months Gabriel, started to get close to the 80-year mark with the lease on his one bedroom flat in Newham. In buying his flat twenty years previously, the lease term was of no concern. Fortunately, it dawned on him that he needed to take steps soon on Extending the lease. Gabriel was able to extend his lease at the eleventh hour last April. Gabriel and the freeholder eventually settled on sum of £6,000 . If he failed to meet the deadline, the premium would have increased by at least £850.
Dr L François bought a one bedroom flat in Newham in March 2004. We are asked if we could estimate the compensation to the landlord would likely be to extend the lease by 90 years. Comparable flats in Newham with an extended lease were valued about £205,000. The mid-range ground rent payable was £50 collected per annum. The lease elapsed on 10 August 2103. Taking into account 79 years left we estimated the compensation to the freeholder to extend the lease to be between £8,600 and £9,800 exclusive of fees.
An example of a Lease Extension decision for a Newham premises is 46 Credon Road in January 2014. On 11 September 2013 Deputy District Judge Price sitting at the Bow County Court made a vesting order that the freeholder surrender his lease and be granted a new lease of the Premises on such terms as may be determined by the First Tier Tribunal (Property Chamber).The appropriate sum as concluded by the Tribunal was £7225 This case was in relation to 1 flat. The remaining number of years on the lease was 69.77 years.