It’s a harsh truth that a Chingford residential lease is a wasting asset. The lease value reduces in proportion to its lease length. The extent of this is not fully appreciated in the early years due to the reduction being disguised by increases in the Chingford property market.Once your lease gets to 85ish years, you need to start thinking about a lease extension. If the number of years remaining slips below eighty years, you will then be required to pay half of the property's 'marriage value' on top of the usual cost of the lease extension to the landlord. Marriage value is the amount of extra value that a lease extension will add the property The majority of leasehold owners in Chingford will be able to extend under the legislation; however a conveyancer should be able to clarify if you are eligibility. In some situations you may not be entitled. There are also strict timeframes and procedures to follow once the process has commenced and you will need to be guided by your lawyer from beginning to end of the formalities.
It is conventional wisdom that a property with in excess of one hundred years remaining is worth approximately the same 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.
| 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. |
| 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; |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
| 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. |
Using our service will provide you increased control over the value of your Chingford leasehold, as your property will be more valuable and marketable in respect of lease length should you decide to sell. The conveyancers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Subsequent to unsuccessful discussions with the landlord of her purpose-built flat in Chingford, Daisy started the lease extension process just as her lease was coming close to the crucial 80-year mark. The lease extension was concluded in January 2006. The landlord’s costs were restricted to a tad over 450 pounds.
Mrs M Clark was assigned a lease of a first floor apartment in Chingford in March 2006. The dilemma was if we could estimate the premium would likely be to prolong the lease by 90 years. Similar residencies in Chingford with 100 year plus lease were valued about £246,800. The mid-range ground rent payable was £60 invoiced yearly. The lease ran out on 2 October 2075. Considering the 50 years as a residual term we approximated the compensation to the freeholder for the lease extension to be between £44,700 and £51,600 plus costs.
An example of a Freehold Enfranchisement decision for a Chingford property is 201 & 201a St. Barnabas Road in October 2013. The Tribunal decided that the price to be paid by the Applicants for the freehold interest is £20,071. This case related to 2 flats. The unexpired residue of the current lease was 69.26 years.