It’s an underpublicised truth that a Homerton residential lease is a deteriorating asset. As the lease term diminishes so does the value of the property. The extent of this is taken for granted in the early years due to the deflation being disguised by increases in the Homerton property market.Where your lease has approximately ninety years left, you need to start thinking about a lease extension. If lease term dips under 80 years, you will then be required to pay 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of extra value that a lease extension will add the property Most leasehold owners in Homerton will be able to extend under the legislation; however a conveyancing solicitor should be able to confirm whether you qualify for an extension. In some cases you may not qualify. 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 conveyancer from beginning to end of the formalities.
It is generally considered that a property with over one hundred years unexpired lease term is worth roughly the same as a freehold. Where an additional 90 years added to any lease with more than 45 years remaining, the property will be worth the same as a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Godiva Mortgages | 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. |
| National Westminster Bank | Mortgage term plus 30 years. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
| Yorkshire 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. |
Using our service gives you better control over the value of your Homerton leasehold, as your property will be more valuable and marketable in respect of lease length should you decide to sell. The lawyers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Last October Eliot, came precariously near to the eighty-year threshold with the lease on his first floor apartment in Homerton. Having purchased his flat two decades ago, the unexpired term was of little importance. by good luck, he recognised he needed to take steps soon on Extending the lease. Eliot arranged for a lease extension just under the wire in January. Eliot and the landlord subsequently agreed on a premium of £5,000 . If he not met the deadline, the sum would have escalated by a minimum £850.
Last Autumn we were phoned by Ms Leah Parker , who took over the lease of a purpose-built flat in Homerton in July 2002. The dilemma was if we could estimate the premium would be to extend the lease by ninety years. Similar flats in Homerton with a long lease were worth £176,200. The average ground rent payable was £65 billed quarterly. The lease concluded in 2080. Considering the 56 years left we estimated the premium to the freeholder for the lease extension to be between £29,500 and £34,000 exclusive of costs.
An example of a Freehold Enfranchisement decision for a Homerton flat is 104 Nightingale Road in May 2009. The Tribunal's Decision is that the premium torbe paid for the enfranchisement in this case is £112,174 This case affected 10 flats. The number of years remaining on the existing lease(s) was 71.25 years.