If you are facing a significant premium because your lease in Burnt Oak 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:
A Burnt Oak leasehold property depreciates with the years remaining on the lease.
Burnt Oak leases on residential properties are gradually diminishing in value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of the lease becomes more expensive. It is the case that most Burnt Oak tenants have the right to extend their lease by an additional 90 years under the 1993 Leasehold Reform Act. Where you are a leasehold owner in Burnt Oak you really ought to check if your lease has between 70 and 90 years left. There are compelling reasons why a Burnt Oak flat owner with a lease having around eighty years remaining should take action to make sure that a lease extension is actioned without delay
Burnt Oak property with a lease extension has roughly the same value as a freehold
It is generally considered that a property with in excess of one hundred years remaining is worth approximately the equivalent as a freehold. Where an further ninety years added to all but the shortest lease, the premises will be worth the same as a freehold for many years in the future.
Banks and Building Societies may not grant a mortgage with a short lease
Banks and building societies are making their criteria more stringent and many now want flats to have a minimum of sixty if not seventy years remaining once the mortgage has expired. Given that a number of flats in Burnt Oak were built in the fifties, sixties and seventies this means many now require lease extensions if they wish to get a mortgage.
| Lender |
Requirement
|
|---|
| Barnsley Building Society |
60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term.
|
| 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.
|
| 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.
|
| 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
|
| TSB |
Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption.
|
What makes us experts in Burnt Oak lease extensions?
Regardless of whether you are a tenant or a freeholder in Burnt Oak,the lease extension solicitors that we work with will always be prepared to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Burnt Oak valuers.
Burnt Oak Lease Extension Case Studies:
Andrew, Burnt Oak, North London
14 months ago Andrew, came precariously near to the eighty-year threshold with the lease on his two bedroom apartment in Burnt Oak. In buying his flat two decades ago, the unexpired term was of minimal importance. Fortunately, he noticed he would soon be paying an inflated amount for a lease extension. Andrew extended the lease just ahead of time in January. Andrew and the freeholder eventually settled on an amount of £6,000 . If the lease had slid lower than eighty years, the figure would have gone up by a minimum £950.
Burnt Oak case:
Dr P Evans took over the lease of a studio apartment in Burnt Oak in August 2003. The question was if we could shed any light on how much (approximately) compensation to the landlord would be for a ninety year extension to my lease. Identical properties in Burnt Oak with 100 year plus lease were in the region of £208,600. The average ground rent payable was £60 collected annually. The lease concluded in 2083. Having 57 years outstanding we approximated the premium to the landlord for the lease extension to be within £30,400 and £35,200 plus professional charges.
Decision in Harrow
An example of a Lease Extension decision for a Burnt Oak flat is
20 Orchard Court Stonegrove in June 2009. The tribunal decided that a premium of £11,040 should be payable for the new lease
This case affected 1 flat. The number of years remaining on the existing lease(s) was 71.55 years.