It’s a harsh truth that a Barking residential lease is a wasting asset. As the lease term reduces so does the value of the property. The extent of this is taken for granted in the first few years due to the depreciation being disguised by increases in the Barking property prices.Once your lease nears 85ish years, you should start thinking about a lease extension. If the number of years remaining falls under 80 years, you will end up paying 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of additional value that a lease extension will add the property Most leasehold owners in Barking will be able to extend under the legislation; however a conveyancing solicitor will be able to confirm if you are eligibility. In some cases you may not qualify. There are also strict timeframes and procedures to be adhered to once the process is initiated and you will need to be guided by your lawyer from beginning to end of the process.
Leasehold properties in Barking with more than one hundred years outstanding on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your property. In such situations there is often little to be gained by buying the reversionary interest unless savings on ground rent and service charges merit it.
|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;
|Coventry Building Society||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.|
|Santander|| You must report the unexpired lease term to us and await our instructions if: |
1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or
2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or
3. no valuation report is provided
However, we will not accept a lease where on expiry of the mortgage:
(i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or
(ii) less than 30 years remain and the loan is repaid on a capital and interest basis
We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder.
|Royal Bank of Scotland||Mortgage term plus 30 years.|
Retaining our service will provide you increased control over the value of your Barking leasehold, as your property will be more valuable and saleable in terms of lease length should you wish to sell. The conveyancers that we work with have a in-depth market knowledge handling many hundreds of lease extensions or freehold purchase transactions.
Jonathan owned a 2 bedroom apartment in Barking being marketed with a lease of just over 72 years remaining. Jonathan informally contacted his freeholder a well known Bristol-based freehold company for a lease extension. The landlord was prepared to agree an extension on non-statutory terms taking the lease to 125 years subject to a new rent initially set at £100 per annum and increase every 25 years thereafter. No ground rent would be due on a lease extension were Jonathan to exercise his statutory right. Jonathan procured expert advice and secured satisfactory deal informally and readily saleable.
In 2013 we were e-mailed by Dr I Bertrand who, having acquired a first floor flat in Barking in October 2006. We are asked if we could shed any light on how much (approximately) compensation to the landlord would be to extend the lease by a further 90 years. Identical homes in Barking with a long lease were worth £193,400. The average ground rent payable was £65 billed monthly. The lease came to a finish in 2082. Considering the 59 years remaining we approximated the premium to the freeholder for the lease extension to be between £21,900 and £25,200 plus professional charges.
An example of a Lease Extension decision for a Barking property is 240 Strone Road in January 2014. the tribunal held that the price to be paid for the freehold interest was£23,538 of which£13,017 is attributable to the ground floor flat and £10,521 to the first floor flat. This case related to 2 flats. The unexpired lease term was 65.5 years.