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Main reasons to start your Bermondsey lease extension

Main reasons to start your Bermondsey lease extension today:

A Bermondsey lease depreciates with the years remaining on the lease.

Owning a flat usually means owning a lease of the property, which has a set term of years. The lease will usually be granted for a prescribed period of time , usually 99 or 125 years, although we have witnessed longer and shorter terms in Bermondsey. Clearly, the length of lease remaining shortens over time. This is often ignored and only becomes a problem when the property has to be sold or refinanced. The shorter the lease the lower the value of the property and the more expensive it will be to obtain a lease extension. Qualifying long lease owners in Bermondsey have the legal entitlement to extend the lease for an additional 90 years under statute. Please give due attention before delaying your Bermondsey lease extension. Holding off that expense now only increases the price you will ultimately have to pay for a lease extension

Bermondsey property with a lease extension is almost the same value as a freehold

Leasehold residencies in Bermondsey with over one hundred years left 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 buying the freehold unless savings on ground rent and service charges warrant it.

Banks and Building Societies may decide not to issue a mortgage with a short lease

The propensity since the credit crunch has been for lenders to tighten lending criteria generally - this has extended to the types of security over which the mortgage is to be granted. This has meant the minimum number of years remaining under the lease required by banks has increased. Historically lenders would lend on a lease with 25 years plus the term of the loan - routinely fifty year leases but those requirements are being increasingly undermined by the requirement for longer and longer leases - many now have a minimum term of 75 years as standard.

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.
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;
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.
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.

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

The lawyers that we work with handle Bermondsey 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.

Bermondsey Lease Extension Case Summaries:

Rhiannon, Bermondsey, South East London,

Following protracted correspondence with the landlord of her one bedroom flat in Bermondsey, Rhiannon commenced the lease extension process as the eighty year mark was rapidly nearing. The lease extension was finalised in March 2011. The freeholder’s fees were restricted to approximately 600 pounds.

Bermondsey case:

In 2013 we were approached by Mr and Mrs. F Young who, having was assigned a lease of a one bedroom flat in Bermondsey in November 2012. We are asked if we could estimate the compensation to the landlord would likely be to prolong the lease by 90 years. Similar homes in Bermondsey with a long lease were worth £184,000. The average ground rent payable was £55 collected per annum. The lease finished in 2078. Considering the 53 years as a residual term we calculated the compensation to the landlord for the lease extension to be within £28,500 and £33,000 plus fees.

Decision in Tower Hamlets

An example of a Freehold Enfranchisement case for a Bermondsey property is 1-41 Royal Tower Lodge 40 Cartwright Street in April 2013. the tribunal adding the agreed value of capitalised ground rents and the reversion the price to be paid for the freehold was £1,187,000 This case was in relation to 41 flats. The remaining number of years on the lease was 107 years.