It’s an underpublicised certainty that a New Eltham residential lease is a wasting asset. The lease value reduces in proportion to its lease length. The extent of this is taken for granted in the early years due to the depreciation being disguised by increases in the New Eltham property prices.Once your lease nears 85ish years, you need to start considering a lease extension. If lease term falls under 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. Marriage value is the amount of additional value that a lease extension will add the property Most leasehold owners in New Eltham will be able to extend under the legislation; however a lawyer should be able to clarify whether you qualify for an extension. In some cases you may not qualify. There are also strict deadlines and procedures to follow once the process has commenced and you will need to be guided by your conveyancer for the duration of the formalities.
It is conventional wisdom that a property with more than 100 years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional 90 years added to all but the shortest lease, the property will be equivalent in value to a freehold for decades to come.
| 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| 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 |
Regardless of whether you are a tenant or a freeholder in New Eltham,the lease extension lawyers that we work with will always be prepared to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with New Eltham valuers.
Two years ago Toby, started to get near to the eighty-year threshold with the lease on his first floor flat in New Eltham. In buying his home two decades ago, the unexpired term was of minimal relevance. Luckily, he became aware that he would imminently be paying an inflated amount for a lease extension. Toby extended the lease at the eleventh hour last July. Toby and the landlord eventually settled on an amount of £5,000 . If the lease had dropped to less than eighty years, the amount would have escalated by a minimum £1,075.
Last Summer we were approach by Dr Alexander Martin , who owned a one bedroom apartment in New Eltham in April 2008. The dilemma was if we could shed any light on how much (roughly) premium would likely be for a 90 year lease extension. Comparative residencies in New Eltham with a long lease were valued around £205,000. The average amount of ground rent was £50 collected every twelve months. The lease expired in 2105. Considering the 79 years as a residual term we approximated the compensation to the freeholder to extend the lease to be within £8,600 and £9,800 not including professional charges.
An example of a Lease Extension decision for a New Eltham flat 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.