Homerton leases on residential properties are gradually losing 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 Homerton residential leaseholders to extend the terms of long leases. If you are a leasehold owner in Homerton you would be well advised to see if your lease has between 70 and ninety years left. In particular once the remaining lease term slips under eighty years, the amount payable for any lease extension increases dramatically as part of the premium you will incur is what is known as a marriage value
It is conventional wisdom that a property with over 100 years remaining is worth roughly the same as a freehold. Where an additional 90 years added to all but the shortest lease, the residence will be worth the same as a freehold for many years in the future.
| 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. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Leeds Building Society | 85 years remaining from the start 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
The lawyers that we work with undertake Homerton 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 conveyancing solicitor we work with provide it.
Aiden was the the leasehold proprietor of a 2 bedroom apartment in Homerton on the market with a lease of a few days over 59 years outstanding. Aiden informally contacted his freeholder being a well known Manchester-based freehold company and enquired on a premium to extend the lease. The freeholder indicated a willingness to grant an extension taking the lease to 125 years on the basis of an increased rent to £200 per annum. Ordinarily, ground rent would not be payable on a lease extension were Aiden to exercise his statutory right. Aiden obtained expert advice and secured an acceptable deal informally and ending up with a market value flat.
In 2014 we were contacted by Mr and Mrs. A Bailey who, having owned a first floor apartment in Homerton in September 2012. We are asked if we could approximate the premium could be to prolong the lease by a further 90 years. Comparable properties in Homerton with an extended lease were worth £183,600. The mid-range ground rent payable was £65 invoiced every twelve months. The lease concluded in 2083. Given that there were 57 years remaining we estimated the premium to the freeholder for the lease extension to be within £28,500 and £33,000 exclusive of costs.
An example of a Freehold Enfranchisement matter before the tribunal for a Homerton property 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.