Havering leases on residential properties are gradually diminishing in value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of the lease becomes more expensive. Legislation has been in place for sometime now allowing qualifying Havering residential leaseholders to extend the terms of long leases. If you are a leasehold owner in Havering you would be well advised to see if your lease has between seventy and ninety years left. In particular once the remaining lease term slips under 80 years, the compensation to the landlord for any lease extension sharply increases as an element of the premium you will incur is what is known as a marriage value
It is conventional wisdom that a residential leasehold with more than one hundred years unexpired lease term is worth approximately the equivalent as a freehold. Where an further 90 years added to any lease with more than 45 years unexpired, the property will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. Leases with fewer than 70 years should only be referred to the issuing office where the following scenario applies, as discretion may be applied subject to bank approval: • Property is located in any of the following prestigious developments: Cadogan, Crown, Grosvenor, Howard de Walden, Portman or Wellcome Trust Estates in Central London AND • The value of the property subject to the short remaining term is £500,000 or more AND • The loan to value does not exceed 90% for purchases, 90% like for like re-mortgages, 80% for re-mortgages with any element of capital raising and 80% for existing Barclays mortgage borrowers applying for additional borrowing; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Chelsea Building Society | 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. |
The conveyancers that we work with undertake Havering 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.
Trailing lengthy correspondence with the freeholder of her basement apartment in Havering, Abbie initiated the lease extension process just as her lease was approaching the all-important 80-year mark. The lease extension was concluded in November 2012. The freeholder’s fees were kept to an absolute minimum.
In 2011 we were called by Mr and Mrs. B Clarke who, having owned a ground floor flat in Havering in May 1996. The dilemma was if we could approximate the compensation to the landlord would likely be for a 90 year extension to my lease. Comparative residencies in Havering with an extended lease were valued around £233,200. The average amount of ground rent was £60 collected quarterly. The lease ended on 14 May 2087. Considering the 61 years as a residual term we calculated the compensation to the freeholder to extend the lease to be within £22,800 and £26,400 exclusive of legals.
An example of a Lease Extension matter before the tribunal for a Havering residence is 37 Lodge Court High Street in November 2013. the decision of the LVT was that the premium to be paid for the new lease was £25,559 This case affected 1 flat. The unexpired term was 57.5 years.