For those whose Poplar property is held on a long lease, the message is clear – if you do nothing, your property will eventually revert to your landlord, leaving you empty-handed. The shorter the lease the less it is worth and the more it will cost to obtain a lease extension.
It is generally considered that a property with more than 100 years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional 90 years added to all but the shortest lease, the residence will be equivalent in value to a freehold for many years ahead.
| 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; |
| Halifax | Minimum 70 years from the date of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| 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 landlord in Poplar,the lease extension lawyers that we work with will always be happy to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Poplar valuers.
Aarav owned a studio flat in Poplar being marketed with a lease of just over fifty eight years outstanding. Aarav informally contacted his landlord a well known Manchester-based freehold company and enquired on a premium to extend the lease. The freeholder was prepared to give an extension on non-statutory terms taking the lease to 125 years on the basis of a rise in the rent to £100 per annum. Ordinarily, ground rent would not be due on a lease extension were Aarav to exercise his statutory right. Aarav obtained expert advice and was able to make an informed decision and handle with the matter and sell the flat.
In 2014 we were phoned by Dr Olivia Moore who, having acquired a purpose-built flat in Poplar in June 2009. We are asked if we could approximate the price would be to prolong the lease by 90 years. Comparable homes in Poplar with an extended lease were valued about £193,400. The average amount of ground rent was £65 billed monthly. The lease elapsed on 24 April 2085. Having 59 years unexpired we estimated the compensation to the freeholder for the lease extension to be within £21,900 and £25,200 plus fees.
An example of a Freehold Enfranchisement case for a Poplar property is 12, 14 & 16 Hull Close in May 2010. the Tribunal determined that the premium payable for the acquisition of the freehold to the subject premises was the sum of £18,300 This case related to 3 flats. The remaining number of years on the lease was 101.61 years.