Barnes residential property held on a long lease is a depreciating asset because a leaseholder only owns the property for a set term.
Leasehold residencies in Barnes with in excess of one hundred years unexpired on the lease are often regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such situations there is often little to be gained by purchasing the freehold unless savings on ground rent and estate charges warrant it.
| Lender | Requirement |
|---|---|
| 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
| 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 conveyancing solicitors that we work with undertake Barnes 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.
Two years ago Eliot, came critically near to the eighty-year threshold with the lease on his basement flat in Barnes. In buying his property 19 years ago, the lease term was of minimal relevance. Thankfully, he realised he needed to take action soon on Extending the lease. Eliot extended the lease just ahead of time last January. Eliot and the landlord ultimately settled on sum of £5,500 . If the lease had dipped to less than eighty years, the figure would have increased by a minimum £875.
Last Spring we were called by Ms Paige Mercier , who acquired a first floor apartment in Barnes in June 2009. We are asked if we could approximate the price could be for a ninety year extension to my lease. Similar flats in Barnes with an extended lease were valued about £280,000. The average amount of ground rent was £55 invoiced yearly. The lease ran out on 4 May 2104. Considering the 79 years left we calculated the compensation to the landlord for the lease extension to be between £13,300 and £15,400 exclusive of costs.
An example of a Freehold Enfranchisement case for a Barnes premises is 25 Petley Road in February 2010. The Tribunal determined that the price payable for the freehold of the subject premises should be £18,760. This case was in relation to 2 flats. The unexpired term was 156.6 years and 66.6 years.