Forest Row Lease Extension - Free Consultation

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Why you should start your Forest Row lease extension


Top reasons for lease extension now:

Increase your lease and increase your Forest Row property value

The re-sale value of a leasehold property in Forest Row depends on how long the lease has left to run. If it is near to or fewer than 80 years you should expect difficulties on re-sale, so it is advisable to arrange for the lease to be extended prior to purchasing. It is ideal to start the process of extending the lease is when the lease still has 82 years to run so that formalities can be addressed prior to the 80 year cut off point. Current legislation enables Forest Row qualifying lessees to acquire a lease extension of ninety years on top of the remaining length of the lease at a peppercorn rent (that is, rent free). The intention of the valuation is to determine the premium payable by the lessee to the freeholder for the purchase of the lease extension.

Forest Row property with a lease extension has roughly the same value as a freehold

It is generally accepted that a property with more than 100 years unexpired lease term is worth approximately the same as a freehold. Where an further ninety years added to all but the shortest lease, the residence will be equivalent in value to a freehold for many years in the future.

Lenders may decide not to grant a mortgage with a short lease

Whether or not the lease is be regarded as a short lease varies by mortgage company, yet lending institutions start to get concerned at around 75 years. This will cause difficulties when you come to sell or refinance your flat as it will be practically unmortgageable. Even though you might have no imminent intention to sell but when you do your buyer will have to wait 2 years before they can commence the legal procedures for an extension to the lease.

Lender Requirement
Bank of Scotland Minimum 70 years from the date of the mortgage.
Birmingham Midshires Minimum 70 years from the date of the mortgage.
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.
The Mortgage Works Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
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 Originations (Will be declined):
- Unexpired lease term less than 70 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 less than or equal to 5 years

Refer to Originations (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 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 Originations):
- 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 Originations (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
- Starting Ground Rent greater than 0.1% of the property value
- Ground Rent review period less than or equal to 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 Originations (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 Originations):
- 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
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 Forest Row lease extensions?

Regardless of whether you are a tenant or a landlord in Forest Row,the lease extension solicitors that we work with will always be prepared to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Forest Row valuers.

Forest Row Lease Extension Case Studies:

Sophia, Forest Row, East Sussex,

Subsequent to unsuccessful discussions with the landlord of her garden apartment in Forest Row, Sophia started the lease extension process as the eighty year deadline was quickly advancing. The legal work was concluded in November 2015. The landlord’s charges were kept to an absolute minimum.

Forest Row case:

In 2012 we were contacted by Mr and Mrs. O David who, having moved into a basement apartment in Forest Row in October 2012. The question was if we could estimate the compensation to the landlord would be for a 90 year extension to my lease. Identical homes in Forest Row with a long lease were in the region of £290,000. The average amount of ground rent was £45 invoiced annually. The lease lapsed on 5 April 2094. Having 73 years as a residual term we estimated the compensation to the landlord for the lease extension to be within £9,500 and £11,000 exclusive of costs.

Forest Row case:

Last Summer we were approach by Dr G Wilson , who moved into a purpose-built flat in Forest Row in July 2007. The question was if we could shed any light on how much (roughly) premium could be for a 90 year lease extension. Comparable properties in Forest Row with 100 year plus lease were in the region of £240,600. The mid-range amount of ground rent was £60 billed annually. The lease terminated on 12 November 2083. Taking into account 62 years as a residual term we approximated the compensation to the freeholder for the lease extension to be between £21,900 and £25,200 not including professional charges.