Owning a apartment usually means owning a lease of the property, this is a ‘time-limited’ interest becoming shorter every day. The lease will normally be granted for a set period of time , usually 99 or 125 years, although we have witnessed longer and shorter terms in Downe. Inevitably, the length of lease left reduces over time. This is often overlooked and only becomes a problem when the property needs to be sold or re-mortgaged. The shorter the lease the lower the value of the property and the more expensive it will be to obtain a lease extension. Eligible leaseholders in Downe have the legal entitlement to extend the lease for an additional 90 years under legislation. Do give careful consideration before delaying your Downe lease extension. Holding off that expense now likely increases the price you will ultimately have to pay to extend your lease
Leasehold premises in Downe with more than 100 years outstanding on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your property. In such situations there is often little upside in purchasing the reversionary interest unless savings on ground rent and estate charges warrant it.
| 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; |
| 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. |
| 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
Regardless of whether you are a tenant or a freeholder in Downe,the lease extension lawyers that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Downe valuers.
Two years ago Jude, started to get close to the eighty-year mark with the lease on his first floor apartment in Downe. Having bought his property twenty years previously, the unexpired term was of no concern. Thankfully, it dawned on him that he needed to take steps soon on Extending the lease. Jude arranged for a lease extension just under the wire in July. Jude and the freeholder in the end agreed on sum of £5,000 . If the lease had fallen to less than eighty years, the figure would have escalated by at least £1,075.
Last Winter we were called by Mr and Mrs. H Morel , who took over the lease of a newly refurbished flat in Downe in March 2002. The dilemma was if we could shed any light on how much (roughly) premium would be for a 90 year extension to my lease. Identical residencies in Downe with an extended lease were valued around £225,800. The average ground rent payable was £60 collected yearly. The lease lapsed in 2086. Having 60 years remaining we estimated the compensation to the freeholder to extend the lease to be within £23,800 and £27,400 not including fees.
An example of a Lease Extension matter before the tribunal for a Downe residence is 1 Southlands Court Southlands Road in September 2013. The Leasehold Valuation Tribunal determined that the premium to be paid by the tenant on the grant of a new lease, in accordance with section 56 and Schedule 13 of the Leasehold Reform, Housing and Urban Development Act 1993 was £30,541 This case related to 1 flat. The unexpired lease term was 50.57 years.