It’s an underpublicised truth that a New Eltham residential lease is a wasting asset. As the lease term diminishes so does the value of the property. The extent of this is taken for granted in the early years due to the deflation being disguised by increases in the New Eltham property prices.Once your lease nears 85ish years, you should start considering a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease slips lower than 80 years - otherwise a higher amount will be due. Most leasehold owners in New Eltham will be able to extend under the legislation; however a lawyer will be able to clarify whether you are eligibility. In some cases you may not qualify. There are also strict timeframes and procedures to follow once the process has commenced and you will need to be guided by your lawyer for the duration of the process.
Leasehold residencies in New Eltham with in excess of one hundred years left on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your home. In such circumstances there is often little upside in buying the reversionary interest unless savings on ground rent and maintenance charges merit it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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; |
| Coventry Building Society | 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. |
| 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
Retaining our service gives you increased control over the value of your New Eltham leasehold, as your property will be more valuable and saleable in relation to the lease length should you wish to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Rory owned a high value flat in New Eltham being marketed with a lease of fraction over 61 years outstanding. Rory informally spoke with his freeholder being a well known local-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 subject to a new rent at the outset set at £200 per annum and doubled every twenty five years thereafter. No ground rent would be payable on a lease extension were Rory to invoke his statutory right. Rory procured expert legal guidance and was able to make an informed judgement and handle with the matter and sell the property.
Last Spring we were contacted by Dr Jordan François , who bought a ground floor apartment in New Eltham in June 2006. We are asked if we could shed any light on how much (roughly) compensation to the landlord would likely be to extend the lease by ninety years. Comparable premises in New Eltham with 100 year plus lease were in the region of £233,200. The average amount of ground rent was £60 billed every twelve months. The lease ended in 2086. Considering the 61 years outstanding we estimated the premium to the landlord for the lease extension to be within £22,800 and £26,400 plus fees.
An example of a Lease Extension matter before the tribunal for a New Eltham residence is 103a Footscray Road in January 2014. The tribunal determines that the premium payable for the extended lease should be £34,500 according to the expert witness valuation calculation This case related to 1 flat.