Unfortunately that a South Woodford residential lease is a wasting asset. The lease value reduces in proportion to its lease length. The extent of this is not fully appreciated in the early years due to the loss of value being disguised by increases in the South Woodford property prices.Once your lease gets to 85ish years, you need to start thinking about a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease falls under 80 years - otherwise a higher premium will be due. Most leasehold owners in South Woodford will be able to extend under the legislation; however a conveyancer should be able to confirm whether you qualify for an extension. In some situations you may not be entitled. There are also strict timeframes and procedures to follow once the process has commenced and you will need to be guided by your lawyer throughout the formalities.
It is conventional wisdom that a residential leasehold with more than 100 years remaining is worth approximately the equivalent as a freehold. Where an further 90 years added to all but the shortest lease, the property will be worth the same as a freehold for decades to come.
| 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 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. |
| 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
Using our service will provide you enhanced control over the value of your South Woodford leasehold, as your property will be more valuable and saleable in respect of lease length should you wish to sell. The conveyancing solicitors that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Following unsuccessful correspondence with the landlord of her garden flat in South Woodford, Samantha initiated the lease extension process as the 80 year threshold was rapidly coming. The lease extension completed in October 2012. The landlord’s charges were kept to an absolute minimum.
In 2014 we were contacted by Dr E André who, having was assigned a lease of a one bedroom apartment in South Woodford in August 2000. We are asked if we could approximate the price would likely be to extend the lease by ninety years. Similar flats in South Woodford with an extended lease were valued about £264,000. The average ground rent payable was £60 collected quarterly. The lease end date was in 2078. Considering the 53 years unexpired we calculated the compensation to the freeholder for the lease extension to be within £37,100 and £42,800 plus professional charges.
An example of a Lease Extension decision for a South Woodford premises is 135 Maybank Road in January 2013. The Tribunal determined that the price to be paid by the tenants for the grant of a new lease is £10,592 This case was in relation to 1 flat. The unexpired term as at the valuation date was 71.2 years.