For anyone whose Morden home is held on a long lease, the message is clear – if you do nothing, your property will ultimately revert to your landlord, leaving you empty-handed. The fewer the years remaining the lower the value of the property and the more expensive it will be to obtain a lease extension.
Leasehold residencies in Morden with over one hundred years unexpired on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your property. In such situations there is often little to be gained by purchasing the freehold unless savings on ground rent and service charges warrant it.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage should be declined (see exception below). Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office. 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; |
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The conveyancing solicitors that we work with handle Morden 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.
Two years ago Omar, started to get close to the 80-year mark with the lease on his purpose- built apartment in Morden. In buying his home two decades ago, the length of the lease was of little importance. Luckily, he realised he needed to take action soon on Extending the lease. Omar was able to extend his lease just in the nick of time in August. Omar and the freeholder via the management company eventually agreed on a premium of £5,000 . If he had missed the deadline, the amount would have escalated by at least £950.
Last Christmas we were phoned by Mrs Danielle Hill , who completed a basement apartment in Morden in March 2003. The dilemma was if we could estimate the compensation to the landlord could be for a ninety year extension to my lease. Comparative premises in Morden with 100 year plus lease were in the region of £275,000. The mid-range amount of ground rent was £45 invoiced monthly. The lease ran out in 2093. Given that there were 69 years left we estimated the compensation to the landlord to extend the lease to be within £12,400 and £14,200 exclusive of expenses.
An example of a Lease Extension decision for a Morden residence is 14 Nutwell Street in January 2014. The premium payable for the acquisition of a new lease of the subject premises was in the sum of £30,523 This case affected 1 flat. The unexpired residue of the current lease was 62.94 years.