It’s an underpublicised certainty that a Forest Hill residential lease is a deteriorating asset. As the lease term diminishes 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 Forest Hill property market.Where your lease has approximately 90 years left, 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 falls below eighty years - otherwise a higher amount will be due. The majority of flat owners in Forest Hill will be able to extend under the legislation; however a lawyer should be able to confirm whether you qualify for an extension. In some cases you may not be entitled. There are also strict timeframes and procedures to follow once the process is instigated and you will need to be guided by your conveyancer for the duration of the formalities.
Leasehold premises in Forest Hill with more than 100 years outstanding on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such situations there is often little upside in buying 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. |
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The conveyancing solicitors that we work with undertake Forest Hill 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 conveyancer we work with provide it.
16 months ago Sebastian, started to get near to the 80-year threshold with the lease on his two bedroom apartment in Forest Hill. In buying his flat two decades ago, the lease term was of minimal importance. Fortunately, he recognised he needed to take action soon on a lease extension. Sebastian was able to extend his lease just under the wire in March. Sebastian and the landlord ultimately settled on sum of £5,000 . If the lease had dipped to less than 80 years, the price would have escalated by at least £1,075.
Dr Max Torres owned a one bedroom flat in Forest Hill in September 2012. The question was if we could approximate the premium could be to extend the lease by ninety years. Identical homes in Forest Hill with an extended lease were in the region of £235,200. The average ground rent payable was £45 collected yearly. The lease ran out in 2092. Taking into account 66 years outstanding we calculated the compensation to the freeholder for the lease extension to be within £12,400 and £14,200 exclusive of expenses.
An example of a Lease Extension case for a Forest Hill residence 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 affected 1 flat. The unexpired term was 61.81 years.