The re-sale value of a leasehold property in Barking depends on how long the lease has remaining. If it is close to or fewer than 80 years you should envisage problems on re-sale, so it is recommended to arrange for the lease to be extended ahead of purchasing. It is preferable to commence the lease extension process when a lease still has 82 years remaining so that formalities can be finalised ahead of the 80 year cut off point. Current legislation entitles Barking qualifying lessees to acquire a lease extension of 90 years in addition to the remaining lease term at a peppercorn rent (that is, rent free). The reason of the valuation is to arrive at an opinion of the sum payable by the lessee to the freeholder for the acquisition of the lease extension.
Leasehold premises in Barking with more than one hundred years unexpired 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 circumstances there is often little upside in buying the freehold unless savings on ground rent and estate charges merit it.
| Lender | Requirement |
|---|---|
| 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; |
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 75 years plus the term of the mortgage at the outset of the mortgage. |
| 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 |
The conveyancers that we work with undertake Barking lease extensions and help protect your position. A lease extension can be arranged to be completed to coincide with a change of ownership so the costs of the lease extension are paid for using part of the sale proceeds. You really do need expert legal advice in this difficult and technical area of law. The conveyancer we work with provide it.
After protracted negotiations with the freeholder of her two bedroom apartment in Barking, Jasmine commenced the lease extension process as the eighty year mark was swiftly advancing. The lease extension was concluded in November 2010. The freeholder’s fees were restricted to approximately 500 GBP.
In 2013 we were called by Dr J Taylor who, having moved into a studio flat in Barking in November 2012. The question was if we could approximate the premium would likely be for a 90 year extension to my lease. Similar residencies in Barking with a long lease were worth £250,000. The average amount of ground rent was £50 invoiced every twelve months. The lease expired on 25 November 2095. Taking into account 69 years outstanding we calculated the compensation to the landlord for the lease extension to be between £9,500 and £11,000 not including fees.
An example of a Lease Extension matter before the tribunal 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 affected 2 flats. The unexpired residue of the current lease was 65.5 years.