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Why you should commence your East Dulwich lease extension


Top reasons for lease extension now:

A East Dulwich lease depreciates with the years remaining on the lease.

The value of East Dulwich leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The expense of a lease extension can increase materialy once the unexpired lease term is less than eighty years

An extended lease is almost the same value as a freehold

It is generally considered that a residential leasehold with over one hundred years unexpired lease term is worth approximately the equivalent as a freehold. Where an further ninety years added to any lease with more than 45 years left, the residence will be equivalent in value to a freehold for decades to come.

Mortgage lenders may decide not to lend on a short lease

Lenders do not like short residential leases. You most probably experience difficulties where you need to sell your flat in East Dulwich if the remaining lease term is less than the criteria set by most banks and building societies. Different lenders have varying requirements but generally they are looking for a minimum remaining lease term of 65 years.

Lender Requirement
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 remaing from the start of the mortgage.
Lloyds TSB Scotland Mortgage term plus 30 years subject to an overall minimum term of 70 years
National Westminster Bank Mortgage term plus 30 years. For a Lifetime Mortgage, the term must be no less than 150 years minus the age of the Borrower.
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).

Ground Rents and event fees must be reasonable at all times during the term of the lease. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us for Valuer consideration. See the guidance below.

SECOND HAND PROPERTIES

Unacceptable - advise Issuing Office (Will be declined):
- Unexpired lease term <55 years
- <30 years remaining at the end of the mortgage term
- Ground Rent >0.5% of the property value
- Ground Rent doubles <every 20 years (e.g. doubles every 5, 10 or 15 years)
- Ground Rent is compounded RPI
- Ground Rent review period ≤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 >0.1% and ≤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 >5 and <10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial, etc
- Estate Rent Charges >£500 p/a (please provide details of what the charges cover)
- Service Charges >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 >85 years
- Ground Rent ≤0.1% of the property value
- Ground Rent review period ≥10 years
- Ground Rent escalation ≤RPI

NEW BUILD PROPERTIES (includes office conversions)

Unacceptable - advise Issuing Office (Will be declined)
- Unexpired lease term <125 years on a new build flat or <250 years on a new build house (does not apply to Shared Ownership)
- Starting Ground Rent >0.1% of the property value
- Ground Rent review period ≤ 5 years
- Ground Rent doubles < every 20 years (e.g. doubles every 5, 10 or 15 years)
- 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 >£500 p/a (please provide details of what the charges cover)
- Service Charges >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 ≥125 years on a new build flat or ≥250 years on a new build house
- Starting Ground Rent ≤0.1% of the property value
- Ground Rent review period >5 years
- Ground Rent escalation ≤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

Get in touch with one of our East Dulwich lease extension solicitors or enfranchisement solicitors

The lawyers that we work with handle East Dulwich 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.

East Dulwich Lease Extension Case Studies:

Omar, East Dulwich, South East London

In recent months Omar, came very close to the eighty-year threshold with the lease on his studio apartment in East Dulwich. In buying his home 19 years previously, the unexpired term was of little bearing. by good luck, he noticed he would soon be paying an inflated amount for a lease extension. Omar arranged for a lease extension just under the wire last September. Omar and the freeholder via the managing agents subsequently settled on the final figure of £5,000 . If he had missed the deadline, the figure would have escalated by at least £875.

East Dulwich case:

Last Autumn we were phoned by Ms Millie Martínez , who owned a basement flat in East Dulwich in October 2002. We are asked if we could approximate the compensation to the landlord could be to extend the lease by 90 years. Comparative residencies in East Dulwich with an extended lease were valued around £246,800. The average amount of ground rent was £60 billed monthly. The lease ended on 5 October 2069. Taking into account 50 years remaining we approximated the compensation to the landlord for the lease extension to be between £44,700 and £51,600 exclusive of expenses.

Decision in Lewisham

An example of a Lease Extension matter before the tribunal for a East Dulwich property is Flat 1 40-42 Ewelme Road in August 2012. the Tribunal assessed the premium for the lease extension in the sum of £11,800 This case was in relation to 1 flat. The number of years remaining on the existing lease(s) was 61.81 years.