Owning a apartment usually means owning a lease of the property, this is a ‘time-limited’ interest becoming shorter every day. This lease will ordinarily be granted for a fixed period of time , ordinarily 99 or 125 years, although we have seen longer and shorter terms in Norbury. Inevitably, the term of lease left shortens over time. This is often overlooked and only becomes a problem when the flat or house has to be disposed of or re-mortgaged. The fewer the years remaining the lower the value of the property and the more it will cost to procure a lease extension. Eligible leaseholders in Norbury have the right to extend the lease for a further 90 years under the 1993 Leasehold Reform Act. Do give careful consideration before putting off your Norbury lease extension. Putting off the cost now only increases the price you will ultimately have to pay to extend your lease
Leasehold properties in Norbury with in excess of one hundred years remaining on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your property. In such situations there is often little upside in buying the reversionary interest unless savings on ground rent and service charges warrant it.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must also be not less than 75 years at the outset of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
Using our service gives you better control over the value of your Norbury leasehold, as your property will be more valuable and saleable in respect of lease length should you decide to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Last Winter Evan, started to get close to the 80-year mark with the lease on his purpose- built apartment in Norbury. In buying his property 18 years previously, the length of the lease was of no bearing. Luckily, he realised he would imminently be paying way over the odds for a lease extension. Evan was able to extend his lease just ahead of time last June. Evan and the freeholder via the managing agents subsequently settled on a premium of £6,000 . If he not met the deadline, the price would have become more exhorbitant by a minimum £850.
In 2011 we were e-mailed by Mr and Mrs. M Laurent who, having bought a studio flat in Norbury in July 2006. We are asked if we could shed any light on how much (roughly) compensation to the landlord would be to prolong the lease by an additional years. Comparative properties in Norbury with a long lease were valued about £198,800. The average ground rent payable was £55 invoiced annually. The lease lapsed on 6 March 2081. Having 55 years remaining we calculated the premium to the freeholder to extend the lease to be between £33,300 and £38,400 exclusive of expenses.
An example of a Lease Extension case for a Norbury premises is Flat 12, Newlands Court Streatham Common North in May 2012. the decision of the Tribunal was that the premium payable by the Applicants to the Respondent for the new lease of the Premises be £70,140. This case affected 1 flat. The unexpired residue of the current lease was 23.25 years.