If you are facing a significant premium because your lease in New Cross has dropped toward the 80-year mark, your previous lawyer may be at fault. Our panel of experts specialise in recovering lease extension costs from negligent firms who failed to protect your investment.
Main reasons to start your New Cross lease extension today:
A New Cross leasehold property depreciates with the years remaining on the lease.
With a domestic leasehold premises in New Cross, you effectively rent it for a certain amount of time. Modern flat leases are usually granted for 99 years or 125. Even though this may appear like a long period of time, you may consider extending the lease sooner as opposed to later. Accepted thinking is that the shorter the lease is the cost of extending the lease gets disproportionately greater especially when there are less than eighty years remaining. Residents in New Cross with a lease approaching 81 years left should seriously think of extending it sooner as opposed to later. Once a lease has fewer than 80 years left, under the relevant Act the landlord is entitled to calculate and levy a greater amount, assessed on a technical multiplication, strangely termed as “marriage value” which is due.
An extended lease is almost the same value as a freehold
It is generally accepted that a residential leasehold with more than one hundred years remaining is worth roughly the equivalent as a freehold. Where an additional ninety years added to any lease with more than 45 years unexpired, the premises will be equivalent in value to a freehold for decades to come.
Lenders will not finance a property with a short lease
Lenders are tightening their criteria and a meaningful number now expect flats to have at least sixty if not seventy years remaining at the expiry of the mortgage. Given that a number of flats in New Cross were created in the fifties, sixties and seventies this means many now need to be extended if they wish to obtain a mortgage.
| Lender |
Requirement
|
|---|
| Barnsley Building Society |
60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term.
|
| Santander |
If the property is leasehold, the remaining unexpired lease term at the end of the new mortgage term must be at least 50 years where any part of the mortgage is on Interest Only and 30 years if all loan parts are on Capital Repayment and Interest. 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.
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.
|
| The Mortgage Works |
Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:
Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer
New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer
Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.
SECOND HAND PROPERTIES
Unacceptable - advise Issuing Office (Will be declined):
- Unexpired lease term less than 70 years
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period less than or equal to 5 years
Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary
Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than 85 years
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI
NEW BUILD PROPERTIES (includes office conversions)
Unacceptable - advise Issuing Office (will be declined):
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house
- Any lease which is subject to a ground rent (or annual rent) being charged which is more than on a peppercorn basis
- Any lease which is subject to a ground rent (or annual rent) being reviewed and altered on any review basis or methodology
Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary
Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- A lease subject to a peppercorn ground rent (annual rent) charges
For the avoidance of doubt, any new build properties completed but not sold pre 30 June 2022 will only be acceptable if the lease conforms to the above guidance
* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years
Lease Extensions We require all Lease Extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where a proposed Lease Extension does not meet these requirements, however you feel that this is in the best interest for our mutual client, please refer all details to the Issuing Office for us to consider.
Please ensure that all lender enquiries are submitted (with full documentation/requirements) at least 2 weeks prior to exchange to allow sufficient time for review and decisioning.
|
| Royal Bank of Scotland |
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.
|
What makes us experts in New Cross lease extensions?
Lease extensions in New Cross can be a difficult process. We recommend you procure guidance from a conveyancing solicitor and valuer with experience in this area.
We provide you with an expert from a selection of lease extension solicitors, which ensures a targeted and efficient service as you have a dedicated port of call with an individual lawyer. Our lease extension solicitors have a wealth of experience procuring New Cross lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.
New Cross Lease Extension Case Summaries:
Ben, New Cross, South East London,
Ben owned a studio apartment in New Cross being marketed with a lease of a little over 72 years remaining. Ben on an informal basis approached his landlord a well known London-based freehold company and enquired on a premium to extend the lease. The landlord was prepared to agree an extension on non-statutory terms taking the lease to 125 years on the basis of a rise in the rent to £50 per annum. No ground rent would be due on a lease extension were Ben to exercise his statutory right. Ben procured expert legal guidance and was able to make an informed decision and handle with the matter and readily saleable.
New Cross case:
Last Summer we were approach by Mr and Mrs. E Johnson , who
was assigned a lease of a basement flat in New Cross in July 2011. We are asked if we could shed any light on how much (approximately) premium could be for a 90 year extension to my lease. Comparative flats in New Cross with a long lease were valued about £290,000. The average ground rent payable was £45 invoiced quarterly. The lease elapsed in 2098. Considering the 72 years unexpired we estimated the compensation to the landlord to extend the lease to be between £11,400 and £13,200 exclusive of legals.
Decision in Lewisham
An example of a Freehold Enfranchisement case 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 affected 3 flats. The unexpired lease term was 80.01 years.