Unfortunately that a Colindale residential lease is a deteriorating 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 Colindale property prices.Once your lease gets to 85ish years, you need to start thinking about 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 dips under 80 years - otherwise a higher amount will be payable. Most flat owners in Colindale will be able to extend under the legislation; however a lawyer will be able to clarify if 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 lawyer throughout the formalities.
It is conventional wisdom that a property with over one hundred years remaining is worth roughly the equivalent as a freehold. Where an further ninety years added to all but the shortest lease, the premises will be equivalent in value to a freehold for many years ahead.
| 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 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Coventry Building Society | 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
The conveyancers that we work with handle Colindale 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.
Last year Isaac, started to get close to the 80-year mark with the lease on his first floor flat in Colindale. In buying his flat twenty years ago, the lease term was of little bearing. by good luck, he realised he would imminently be paying an inflated amount for Extending the lease. Isaac was able to extend his lease just under the wire in April. Isaac and the landlord who owned the flat above in the end settled on sum of £5,000 . If the lease had dropped below 80 years, the sum would have gone up by at least £975.
In 2013 we were e-mailed by Dr N Gunderson who, having moved into a newly refurbished flat in Colindale in February 2007. The question was if we could shed any light on how much (roughly) price would be to prolong the lease by ninety years. Identical homes in Colindale with 100 year plus lease were worth £270,000. The average amount of ground rent was £55 invoiced monthly. The lease finished in 2101. Having 75 years unexpired we approximated the compensation to the landlord for the lease extension to be within £9,500 and £11,000 exclusive of costs.
An example of a Lease Extension case for a Colindale residence is 27B Hillside in February 2010. the resulting premium, all other aspects of the valuation having been agreed between the parties was set at £8,250 This case was in relation to 1 flat. The unexpired lease term was 70.25 years.