The re-sale value of a leasehold property in Barnet is impacted by how many years the lease has left to run. If it is near to or fewer than eighty years you should foresee problems on re-sale, so it is advisable to arrange for a lease extension ahead of purchasing. It is preferable to start the lease extension process when the lease still has 82 years remaining so that formalities can be concluded prior to the eighty year mark. Current legislation enables Barnet qualifying lessees to a 90 year extension added to their unexpired lease term (ie if your lease has 50 years left the statutory lease extension will provide a new term of 140 years). The purpose of the valuation is to arrive at an opinion of the premium payable by the lessee to the freeholder for the acquisition of the lease extension.
It is generally accepted that a property with in excess of one hundred years unexpired lease term is worth roughly the same as a freehold. Where an further 90 years added to any lease with more than 45 years remaining, the residence will be equivalent in value to a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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; |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The lawyers that we work with handle Barnet 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 lawyer we work with provide it.
During the course of the last few months Hugo, started to get close to the 80-year threshold with the lease on his one bedroom flat in Barnet. Having bought his home two decades ago, the length of the lease was of no bearing. Fortunately, it dawned on him that he needed to take action soon on Extending the lease. Hugo was able to extend his lease just under the wire last April. Hugo and the landlord who owned the flat above eventually agreed on sum of £5,500 . If he had missed the deadline, the premium would have become more costly by a minimum £1,075.
In 2014 we were called by Dr U Smith who, having moved into a studio flat in Barnet in June 2001. The question was if we could shed any light on how much (roughly) compensation to the landlord could be for a ninety year lease extension. Comparable premises in Barnet with an extended lease were valued about £218,400. The average amount of ground rent was £60 invoiced yearly. The lease elapsed in 2085. Having 59 years as a residual term we approximated the compensation to the landlord for the lease extension to be between £27,600 and £31,800 not including professional charges.
An example of a Lease Extension case for a Barnet property 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 was in relation to 1 flat. The unexpired residue of the current lease was 76 years.