Unfortunately that a Bethnal Green residential lease is a deteriorating asset. The lease value drops in proportion to its lease length. The extent of this is not fully appreciated in the first few years due to the reduction being disguised by increases in the Bethnal Green property prices.Where your lease has approximately ninety years left, you need to start considering a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease slips under eighty years - otherwise a higher premium will be payable. Most flat owners in Bethnal Green will be able to extend under the legislation; however a conveyancer should be able to clarify whether you are eligibility. In some situations you may not qualify. There are also strict deadlines and procedures to follow once the process has commenced and you will need to be guided by your conveyancer from beginning to end of the process.
It is generally accepted that a property with in excess of one hundred years remaining is worth approximately the equivalent as a freehold. Where an additional 90 years added to all but the shortest lease, the premises will be equivalent in value to a freehold for many years ahead.
| 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 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The conveyancers that we work with procure Bethnal Green 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.
In recent months Gabriel, came dangerously near to the eighty-year mark with the lease on his one bedroom apartment in Bethnal Green. Having bought his property twenty years previously, the lease term was of minimal relevance. Luckily, he realised he needed to take action soon on a lease extension. Gabriel extended the lease just under the wire last April. Gabriel and the landlord ultimately agreed on a premium of £5,500 . If he had missed the deadline, the price would have increased by a minimum £900.
Mrs Georgina White was assigned a lease of a one bedroom apartment in Bethnal Green in July 2010. We are asked if we could approximate the compensation to the landlord would be for a ninety year extension to my lease. Comparable properties in Bethnal Green with 100 year plus lease were worth £191,400. The mid-range ground rent payable was £55 invoiced yearly. The lease elapsed in 2079. Taking into account 54 years remaining we estimated the compensation to the landlord to extend the lease to be within £34,200 and £39,600 exclusive of costs.
An example of a Lease Extension case for a Bethnal Green flat is 137 & 139 Haberdasher Street in December 2013. The Tribunal determines in accordance with section 48 and Schedule 13 of the Leasehold Reform, Housing and Urban Development Act 1993 that the premium for the extended lease for each Property should be £12,350.00. This case was in relation to 2 flats. The remaining number of years on the lease was 72.39 years.