It’s an underpublicised certainty that a Barking residential lease is a wasting asset. As the lease term diminishes so does the value of the property. The extent of this is not fully appreciated in the first few years due to the deflation being disguised by increases in the Barking property market.Once your lease nears 85ish years, you should 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. The majority of flat owners in Barking will be able to extend under the legislation; however a conveyancing solicitor will be able to clarify if you qualify for an extension. In some situations you may not qualify. There are also strict timeframes and procedures to follow once the process is instigated and you will need to be guided by your lawyer for the duration of the formalities.
It is generally accepted that a property with in excess of one hundred years remaining is worth approximately the same as a freehold. Where an further ninety years added to all but the shortest lease, the residence will be equivalent in value to a freehold for many years in the future.
| 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; |
| 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. |
| 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. |
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.
Henry was the the leasehold owner of a conversion apartment in Barking on the market with a lease of fraction over fifty eight years remaining. Henry on an informal basis 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 an increased rent to £125 per annum. Ordinarily, ground rent would not be due on a lease extension were Henry to invoke his statutory right. Henry obtained expert advice and secured satisfactory deal without going to tribunal and readily saleable.
Last month we were contacted by Mr and Mrs. L James , who was assigned a lease of a purpose-built apartment in Barking in February 2010. We are asked if we could estimate the compensation to the landlord would be for a ninety year extension to my lease. Similar premises in Barking with a long lease were valued about £183,600. The average ground rent payable was £65 invoiced annually. The lease lapsed in 2083. Considering the 57 years unexpired we estimated the premium to the freeholder for the lease extension to be between £28,500 and £33,000 plus legals.
An example of a Lease Extension matter before the tribunal for a Barking residence 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 was in relation to 2 flats. The unexpired lease term was 65.5 years.