If you are facing a significant premium because your lease in Barnet has dropped toward the 80-year mark, your previous lawyer may be at fault. Our panel of experts specialise in recovering lease extension costs from negligent firms who failed to protect your investment.
Top reasons for lease extension now:
Increase your lease and increase your Barnet property value
When it comes to residential leasehold premises in Barnet, you are actually buying an entitlement to live in a property for a set period of time. Modern flat leases are usually granted for 99 years or 125. Many leasehold owners become complacent as this seems like a lengthy period of time, you should consider a lease extension sooner as opposed to later. The general rule is that the shorter the number of years is the cost of extending the lease increases markedly particularly once there are less than 80 years left. Leasehold owners in Barnet with a lease approaching 81 years left should seriously consider extending it without delay. When a lease has less than eighty years remaining, under the relevant legislation the freeholder is entitled to calculate and demand a larger premium, assessed on a technical calculation, known as “marriage value” which is payable.
An extended lease is almost the same value as a freehold
It is conventional wisdom that a residential leasehold with more than one hundred years unexpired lease term is worth roughly the same as a freehold. Where an further ninety years added to any lease with more than 45 years left, the residence will be worth the same as a freehold for decades to come.
Lenders will not finance a property on a short lease
Lending institutions are less likely to grant a mortgage on a residential flat in Barnet with a short lease. Many lenders simply refuse to lend on leases with less than 75 years remaining.
| Lender |
Requirement
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|---|
| 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.
|
| Godiva Mortgages |
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.
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| Nationwide Building Society |
- Our minimum unexpired lease term is 55 years, except where lending is over 85% of the purchase price/valuation on a second hand flat, in which case our minimum unexpired term is 90 years.
- There must be at least 30 years remaining at the end of the mortgage term (regardless of the length of lease at the start).
Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:
Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer
- Where lending is over 85% of the purchase price/valuation on a second hand flat and the unexpired lease term on the offer is 90 years or more - only advise us if the actual lease term is less than 90 years.
New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer
Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.
SECOND HAND PROPERTIES
Unacceptable - advise Issuing Office (Will be declined):
- Unexpired lease term less than 55 years
- Unexpired lease term less than 90 years where we are lending more than 85% of the purchase price/valuation on a second hand flat
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period is less than or equal to 5 years
Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 55 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial, etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary
Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than 85 years (Minimum 90 years where we are lending more than 85% of the purchase price/valuation on a second hand flat)
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI
NEW BUILD PROPERTIES (includes office conversions)
Unacceptable - advise Issuing Office (Will be declined)
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house (does not apply to Shared Ownership)
- Any lease which is subject to a Ground Rent (or Annual Rent) being charged which is more than on a peppercorn basis
- Any lease which is subject to a Ground Rent (or Annual Rent) being charged which is more than on a peppercorn basis
Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary
Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- A lease subject to a peppercorn Ground Rent (Annual Rent) charges
For the avoidance of doubt, any New Build properties completed but not sold pre-30 June 2022 will only be acceptable if the Lease conforms to the above guidance.
* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years.
Lease Extensions We require all Lease Extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where a proposed Lease Extension does not meet these requirements, however you feel that this is in the best interest for our mutual client, please refer all details to the Issuing Office for us to consider.
Please ensure that all lender enquiries are submitted (with full documentation/requirements) at least 2 weeks prior to exchange to allow sufficient time for review and decisioning.
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| Santander |
If the property is leasehold, the remaining unexpired lease term at the end of the new mortgage term must be at least 50 years where any part of the mortgage is on Interest Only and 30 years if all loan parts are on Capital Repayment and Interest. 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.
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.
|
| 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
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Why use us for your lease extension in Barnet?
Using our service gives you enhanced control over the value of your Barnet leasehold, as your property will be more valuable and marketable in terms of lease length should you decide to sell.
The conveyancers that we work with have a in-depth market knowledge handling many hundreds of lease extensions or freehold purchase transactions.
Barnet Lease Extension Case Studies:
Riley, Barnet, North London
In 2014 Riley, started to get near to the 80-year threshold with the lease on his first floor flat in Barnet. Having bought his flat twenty years previously, the lease term was of minimal importance. As luck would have it, he realised he needed to take action soon on a lease extension. Riley extended the lease just in the nick of time last May. Riley and the landlord who owned the flat above subsequently settled on sum of £6,000 . If he not met the deadline, the premium would have escalated by a minimum £1,150.
Barnet case:
Last March we were contacted by Dr T Williams , who
completed a studio apartment in Barnet in May 2001. We are asked if we could estimate the price would likely be to prolong the lease by a further 90 years. Comparative properties in Barnet with a long lease were worth £270,000. The mid-range amount of ground rent was £65 collected monthly. The lease concluded on 24 September 2094. Considering the 68 years outstanding we estimated the premium to the landlord to extend the lease to be between £12,400 and £14,200 exclusive of expenses.
Decision in Barnet
An example of a Lease Extension matter before the tribunal for a Barnet premises is
Flat 2 2 Netherfield Road in April 2010. The Tribunale held that premium payable for a 90 year extension to the existing Lease should be £7,705.
This case affected 1 flat. The remaining number of years on the lease was 76 years.