It’s a harsh certainty that a South London residential lease is a wasting asset. As the lease term diminishes so does the value of the property. The extent of this is taken for granted in the early years due to the deflation being disguised by increases in the South London property market.Where your lease has approximately 90 years left, you need to start considering a lease extension. If lease term falls under eighty years, you will then be required to pay 50% of the property's 'marriage value' on top of the usual cost of the lease extension to the landlord. The marriage fee is the amount of extra value that a lease extension will add the property Most leasehold owners in South London will be able to extend under the legislation; however a conveyancing solicitor will be able to clarify whether you qualify for an extension. In some cases you may not qualify. There are also strict timeframes and procedures to be adhered to once the process has commenced and you will need to be guided by your conveyancing solicitor from beginning to end of the formalities.
It is generally considered that a residential leasehold with in excess of one hundred years remaining is worth approximately the equivalent as a freehold. Where an further 90 years added to any lease with more than 35 years unexpired, the premises will be equivalent in value to a freehold for decades to come.
| 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| 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 |
Irrespective of whether you are a tenant or a freeholder in South London,the lease extension lawyers that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with South London valuers.
Two years ago Henry, came perilously close to the eighty-year mark with the lease on his two bedroom flat in South London. In buying his property two decades ago, the length of the lease was of minimal relevance. As luck would have it, it dawned on him that he would soon be paying way over the odds for Extending the lease. Henry extended the lease at the eleventh hour in April. Henry and the landlord who owned the flat above subsequently agreed on an amount of £6,000 . If the lease had dropped lower than eighty years, the amount would have become more costly by a minimum £975.
In 2014 we were contacted by Mr Caleb Díaz who, having was assigned a lease of a basement apartment in South London in February 1995. The dilemma was if we could shed any light on how much (approximately) premium could be to extend the lease by a further 90 years. Identical homes in South London with an extended lease were valued about £201,200. The average ground rent payable was £55 collected yearly. The lease ran out in 2081. Considering the 56 years as a residual term we estimated the compensation to the landlord to extend the lease to be within £31,400 and £36,200 not including professional charges.
An example of a Lease Extension decision for a South London flat is Flat B 10 Grove Avenue in October 2013. Following a vesting order Clerkenwell and Shoreditch County Court 3rd July 2013 The tribunal determines that the premium payable for the lease extension was £36,215.00 This case affected 1 flat. The remaining number of years on the lease was 65.21 years.