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Why you should start your Earls Court lease extension


Main reasons to start your Earls Court lease extension today:

Increase your lease and increase your Earls Court property value

Owning a flat usually means owning a lease of the property, which has a finite term of years. This lease will ordinarily be granted for a set period of time , usually 99 or 125 years, although we have witnessed longer and shorter terms in Earls Court. Inevitably, the length of lease remaining reduces as time goes by. This is often overlooked and only raises itself as an issue when the residence has to be disposed of or refinanced. The fewer the years remaining the less it is worth and the more it will cost to procure a lease extension. Qualifying long lease owners in Earls Court have the legal entitlement to extend the lease for an additional 90 years in accordance with legislation. Do give due consideration before putting off your Earls Court lease extension. Holding off that expense now only increases the price you will eventually have to pay for a lease extension

An extended lease has roughly the same value as a freehold

Leasehold residencies in Earls Court with in excess of one hundred years unexpired on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such situations there is often little to be gained by purchasing the freehold unless savings on ground rent and service charges merit it.

Mortgage lenders may decide not to finance a property on a short lease

Lenders are really clamping down as regards to homes in Earls Court with short leases. For instance you might discover that their lending criteria are stricter and that they adjust interest rates depending on the unexpired lease term. Some may even refuse to lend completely, so if you wanted to sell, your remaining options would be to find a cash purchaser, or try your luck at auction thus narrowing your market.

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.
Nationwide Building Society - Our minimum unexpired lease term is 55 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

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
- 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 0.5% 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
- 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)
- Starting Ground Rent greater than 0.1% of the property value
- Ground Rent review period less than or equal to every 5 years
- 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

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Ground Rent is linked to any indices greater than RPI
- Ground Rent is linked to the value of the building*
- 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 0.5% 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
- Starting Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than 5 years
- Ground Rent escalation less than or equal to RPI

* 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.
TSB Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption.
Virgin 85 years at the time of completion. If it's less, we require it to be extended on or before completion.

What makes us experts in Earls Court lease extensions?

The conveyancing solicitors that we work with undertake Earls Court 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 lawyer we work with provide it.

Earls Court Lease Extension Example Cases:

Sebastian, Earls Court, West London

During the course of the last few months Sebastian, started to get near to the 80-year threshold with the lease on his basement apartment in Earls Court. Having purchased his property two decades ago, the length of the lease was of minimal significance. Thankfully, he became aware that he would soon be paying an inflated amount for a lease extension. Sebastian was able to extend his lease at the eleventh hour in May. Sebastian and the freeholder ultimately settled on an amount of £5,500 . If he had missed the deadline, the premium would have become more costly by at least £950.

Earls Court case:

In 2014 we were e-mailed by Mr and Mrs. Y Davis who, having moved into a basement flat in Earls Court in July 2005. The dilemma was if we could estimate the compensation to the landlord could be for a 90 year lease extension. Similar properties in Earls Court with an extended lease were in the region of £261,600. The average ground rent payable was £60 invoiced per annum. The lease elapsed in 2073. Given that there were 52 years unexpired we calculated the compensation to the freeholder for the lease extension to be within £39,000 and £45,000 plus professional charges.

Decision in Kensington and Chelsea

An example of a Freehold Enfranchisement matter before the tribunal for a Earls Court residence is 5 Wetherby Gardens in June 2014. the Tribunal concluded that the price to be paid for the freehold of the property was £2,369,452. This case affected 5 flats. The unexpired term was 38.98 years.