Unfortunately that a Erith residential lease is a wasting asset. As the lease term reduces so does the value of the property. The extent of this is not fully appreciated in the first few years due to the deflation being disguised by increases in the Erith property market.Where your lease has approximately ninety years left, you should start thinking about a lease extension. If the number of years remaining falls below eighty years, you will then be required to pay half of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. The marriage fee is the amount of additional value that a lease extension will add the property Most leasehold owners in Erith will be able to extend under the legislation; however a lawyer should be able to clarify whether you are eligibility. In some situations you may not be entitled. There are also strict deadlines and procedures to be adhered to once the process is instigated and you will need to be guided by your lawyer from beginning to end of the process.
Leasehold properties in Erith with more than 100 years unexpired on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such situations there is often little upside in buying the reversionary interest unless savings on ground rent and estate charges justify 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. |
| Bank of Scotland | 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. |
| 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. |
Engaging our service will provide you better control over the value of your Erith leasehold, as your property will be more valuable and marketable in respect of lease length should you want to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
During the course of the last few months Ben, came very close to the 80-year threshold with the lease on his ground floor flat in Erith. In buying his flat two decades ago, the length of the lease was of minimal concern. Fortunately, he realised he needed to take action soon on a lease extension. Ben arranged for a lease extension just under the wire in January. Ben and the freeholder via the management company in the end settled on sum of £5,000 . If the lease had dipped below 80 years, the amount would have escalated by at least £1,000.
In 2012 we were phoned by Ms A François who, having purchased a garden apartment in Erith in May 2006. The dilemma was if we could estimate the premium would be for a 90 year lease extension. Comparative premises in Erith with 100 year plus lease were valued around £183,600. The mid-range ground rent payable was £65 collected annually. The lease ended in 2083. Taking into account 57 years as a residual term we calculated the compensation to the freeholder to extend the lease to be within £28,500 and £33,000 exclusive of fees.
An example of a Lease Extension matter before the tribunal for a Erith residence is Various @ Colombus Square in January 2012. the Tribunal calculated the premiums to be paid for new leases for each of the flats in Mariners Walk to be £3822 and the premium to be paid for the new lease of 2 Knights Court to be £4439. This case was in relation to 13 flats. The unexpired residue of the current lease was 76 years.