Unfortunately that a North Harrow residential lease is a deteriorating asset. As the lease term reduces so does the value of the property. The extent of this is not fully appreciated in the early years due to the loss of value being disguised by increases in the North Harrow property market.Once your lease nears 85ish years, you need to 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 under eighty years - otherwise a higher premium will be payable. Most flat owners in North Harrow will be able to extend under the legislation; however a lawyer should be able to clarify if you are eligibility. In some situations you may not be entitled. There are also strict deadlines and procedures to follow once the process has commenced and you will need to be guided by your conveyancing solicitor throughout the process.
It is conventional wisdom that a property with over one hundred years unexpired lease term is worth approximately the same as a freehold. Where an further ninety years added to all but the shortest lease, the residence will be equivalent in value to a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
| 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. |
Engaging our service gives you increased control over the value of your North Harrow leasehold, as your property will be more valuable and saleable in relation to the lease length should you wish to sell. The conveyancers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Finley was the the leasehold proprietor of a conversion flat in North Harrow being sold with a lease of a few days over fifty eight years unexpired. Finley 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 indicated a willingness to grant an extension taking the lease to 125 years on the basis of an increased rent to £50 annually. No ground rent would be due on a lease extension were Finley to exercise his statutory right. Finley procured expert advice and secured satisfactory resolution without going to tribunal and ending up with a market value flat.
In 2010 we were contacted by Mr and Mrs. W Walker who, having owned a first floor flat in North Harrow in October 2004. We are asked if we could estimate the premium would likely be for a 90 year lease extension. Comparative premises in North Harrow with 100 year plus lease were in the region of £246,800. The average amount of ground rent was £60 collected monthly. The lease ran out on 16 January 2075. Considering the 50 years remaining we approximated the premium to the landlord for the lease extension to be between £44,700 and £51,600 plus legals.
An example of a Lease Extension decision for a North Harrow residence is flat 93b Welldon Crescent in May 2009. The Tribunals valuation for a 90-year lease extension of this fat was £13,171 This case related to 1 flat. The unexpired term as at the valuation date was 75.25 years.