The re-sale value of a leasehold property in New Cross depends on how many years the lease has remaining. If it is near to or less than eighty years you should foresee problems on re-sale, so it is recommended to arrange for the lease to be extended prior to buying. It is ideal to start the lease extension process when a lease still has 82 years remaining so that formalities can be concluded in advance of the 80 year cut off point. Statute enables New Cross qualifying lessees to a 90 year extension added to their remaining lease term (ie if your lease has fifty years left the statutory lease extension will provide a new term of 140 years). The reason of the valuation is to determine the amount payable by the lessee to the freeholder for the purchase of the lease extension.
It is conventional wisdom that a residential leasehold with more than 100 years unexpired lease term is worth approximately the same as a freehold. Where an additional 90 years added to any lease with more than 30 years left, the residence will be worth the same as a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| 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; |
| 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. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| 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. |
Retaining our service will provide you increased control over the value of your New Cross leasehold, as your property will be more valuable and marketable in terms of lease length should you decide to sell. The conveyancers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Last year Hugo, came perilously close to the eighty-year mark with the lease on his leasehold apartment in New Cross. In buying his flat two decades ago, the length of the lease was of minimal interest. Luckily, he noticed he would soon be paying way over the odds for Extending the lease. Hugo was able to extend his lease just ahead of time in April. Hugo and the freeholder via the managing agents subsequently settled on sum of £5,500 . If he not met the deadline, the amount would have gone up by at least £950.
Last Christmas we were called by Dr N Williams , who bought a ground floor flat in New Cross in February 2005. We are asked if we could approximate the price would be for a ninety year lease extension. Similar properties in New Cross with an extended lease were in the region of £248,000. The average ground rent payable was £65 invoiced per annum. The lease came to a finish in 2089. Given that there were 63 years as a residual term we estimated the compensation to the landlord for the lease extension to be within £20,000 and £23,000 not including fees.
An example of a Freehold Enfranchisement matter before the tribunal for a New Cross residence is 41 Endwell Road in March 2013. this matter relateed to the acquisition of the freehold of a mid- terraced Victorian house converted into three separate self-contained dwellings. By an order dated 28/11/2012, Deputy District Judge Cole in the Bromley County Court held that the leaseholders were entitled to acquire the freehold and directed that the premium payable be determined by this Tribunal. The Tribunal assessed the premium to be £14,753 This case was in relation to 3 flats. The unexpired lease term was 80.01 years.