It’s a harsh truth that a New Cross residential lease is a wasting asset. As the lease term diminishes so does the value of the property. The extent of this is not fully appreciated in the first few years due to the deflation being disguised by increases in the New Cross property market.Where your lease has approximately ninety years left, you should start considering a lease extension. If lease term falls below eighty years, you will then be required to pay 50% of the property's 'marriage value' on top of the usual cost of the lease extension to the landlord. The marriage fee is the amount of extra value that a lease extension will add the property The majority of flat owners in New Cross will be able to extend under the legislation; however a conveyancing solicitor will be able to confirm whether you qualify for an extension. In some situations you may not be entitled. There are also strict timetables and procedures to be adhered to once the process is instigated and you will need to be guided by your conveyancer for the duration of the process.
Leasehold properties in New Cross with in excess of one hundred years left on the lease are often regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such situations there is often little to be gained by buying the freehold unless savings on ground rent and maintenance charges justify 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 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; |
| Chelsea 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. |
| 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 |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| 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. |
The lawyers that we work with handle New Cross 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 conveyancer we work with provide it.
Subsequent to protracted discussions with the freeholder of her one bedroom flat in New Cross, Katie started the lease extension process as the 80 year mark was swiftly coming. The transaction completed in July 2015. The landlord’s fees were restricted to under 550 pounds.
In 2014 we were approached by Mr and Mrs. L Flores who, having acquired a one bedroom flat in New Cross in May 1995. We are asked if we could estimate the price would likely be to extend the lease by an additional years. Similar properties in New Cross with a long lease were in the region of £216,000. The average ground rent payable was £60 collected monthly. The lease concluded in 2084. Taking into account 58 years as a residual term we calculated the compensation to the landlord to extend the lease to be within £28,500 and £33,000 exclusive of costs.
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 number of years remaining on the existing lease(s) was 80.01 years.