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Why you should start your Barking lease extension

Why you should start your Barking lease extension today:

Increase your lease and increase your Barking property value

Barking leases on residential properties are gradually decreasing in value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of your lease becomes more expensive. Most owners of residential leasehold property in Barking enjoy rights under legislation to extend the terms of their leases. Where you are a leasehold owner in Barking you would be well advised to investigate if your lease has between seventy and ninety years left. In particular once the remaining lease term slips under 80 years, the premium due on any lease extension sharply increases as part of the premium you pay is what is known as a marriage value

An extended lease is almost the same value as a freehold

Leasehold premises 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 premises. In such circumstances there is often little upside in purchasing the reversionary interest unless savings on ground rent and estate charges merit it.

Lending institutions may not lend with a short lease

Lenders are really restricting their approach as regards to homes in Barking with short leases. For instance you might discover that their lending requirements are stricter and that they alter interest rates depending on how many years are left on the lease. Some may even refrain from lending completely, so where you wanted to sell, your only options would be to find a cash purchaser, or try your luck at auction thus restricting your market.

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.
Bank of Scotland Minimum 70 years from the date of the mortgage.
Halifax Minimum 70 years from the date of the mortgage.
National Westminster Bank Mortgage term plus 30 years.
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.

Get in touch with one of our Barking lease extension solicitors or enfranchisement solicitors

The conveyancing solicitors that we work with procure 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 conveyancing solicitor we work with provide it.

Barking Lease Extension Case Summaries:

Logan, Barking, Essex,

Logan owned a 2 bedroom apartment in Barking on the market with a lease of a few days over 61 years left. Logan on an informal basis contacted his landlord being a well known Bristol-based freehold company and enquired on a premium to extend the lease. The landlord was keen to give an extension on non-statutory terms taking the lease to 125 years on the basis of an increased rent to £50 annually. Ordinarily, ground rent would not be due on a lease extension were Logan to invoke his statutory right. Logan procured expert advice and was able to make a more informed judgement and handle with the matter and sell the flat.

Barking case:

In 2009 we were phoned by Mr and Mrs. B Parker who, having purchased a studio apartment in Barking in May 1997. The question was if we could approximate the compensation to the landlord would likely be for a 90 year lease extension. Identical residencies in Barking with a long lease were in the region of £256,600. The average amount of ground rent was £60 collected yearly. The lease ended in 2076. Taking into account 52 years left we calculated the compensation to the freeholder for the lease extension to be between £41,800 and £48,400 not including fees.

Decision in Newham

An example of a Lease Extension case for a Barking flat 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 term as at the valuation date was 65.5 years.