If you are facing a significant premium because your lease in North West London has dropped toward the 80-year mark, your previous lawyer may be at fault. Our panel of experts specialise in recovering lease extension costs from negligent firms who failed to protect your investment.
Why you should commence your North West London lease extension today:
A North West London leasehold property depreciates with the years remaining on the lease.
Owning a flat usually means owning a lease of the property, this is a ‘time-limited’ interest becoming shorter every day. your lease will normally be granted for a fixed period of time , ordinarily 99 or 125 years, although we have seen longer and shorter terms in North West London. Inevitably, the length of lease left shortens over time. This may slip by relatively unnoticed when the property needs to be sold or re-mortgaged. The fewer the years remaining the less it is worth and the more expensive it will be to procure a lease extension. Qualifying leaseholders in North West London have the legal entitlement to extend the lease for an additional 90 years under the 1993 Leasehold Reform Act. You should give due deliberation before putting off your North West London lease extension. Holding off that expense now likely increases the price you will eventually have to pay to extend your lease
An extended lease is almost the same value as a freehold
It is generally accepted that a residential leasehold with more than one hundred years unexpired lease term is worth roughly the equivalent as a freehold. Where an further ninety years added to any lease with more than 35 years remaining, the premises will be worth the same as a freehold for decades to come.
Banks and Building Societies may decide not to grant a mortgage with a short lease
Mortgage lenders have specific criteria when loaning monies charged on leasehold homes. Some will simply refrain from lending at all once an unexpired lease term drops beneath a certain unexpired lease term. Many Mortgage lenders will not regard property with an unexpired term of less than seventy years suitable security. In addition to this being important when selling, it is also relevant if you are wanting to remortgage your North West London home.
| Lender |
Requirement
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| Bank of Scotland |
Minimum 70 years from the date of the mortgage.
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| 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.
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| TSB |
Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption.
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| The Mortgage Works |
Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:
Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer
New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer
Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.
SECOND HAND PROPERTIES
Unacceptable - advise Issuing Office (Will be declined):
- Unexpired lease term less than 70 years
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period less than or equal to 5 years
Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary
Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than 85 years
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI
NEW BUILD PROPERTIES (includes office conversions)
Unacceptable - advise Issuing Office (will be declined):
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house
- Any lease which is subject to a ground rent (or annual rent) being charged which is more than on a peppercorn basis
- Any lease which is subject to a ground rent (or annual rent) being reviewed and altered on any review basis or methodology
Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary
Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- A lease subject to a peppercorn ground rent (annual rent) charges
For the avoidance of doubt, any new build properties completed but not sold pre 30 June 2022 will only be acceptable if the lease conforms to the above guidance
* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years
Lease Extensions We require all Lease Extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where a proposed Lease Extension does not meet these requirements, however you feel that this is in the best interest for our mutual client, please refer all details to the Issuing Office for us to consider.
Please ensure that all lender enquiries are submitted (with full documentation/requirements) at least 2 weeks prior to exchange to allow sufficient time for review and decisioning.
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| Royal Bank of Scotland |
Mortgage term plus 30 years.
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Get in touch with one of our North West London lease extension solicitors or enfranchisement solicitors
Lease extensions in North West London can be a difficult process. We recommend you procure guidance from a lawyer and surveyor well versed in the legislation and lease extension process.
We provide you with an expert from a selection of lease extension solicitors, which ensures a targeted and efficient service as you have a dedicated port of call with an individual lawyer. Our lease extension solicitors have a wealth of experience procuring North West London lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.
North West London Lease Extension Example Cases:
Gabriel, North West London, London,
Gabriel was the the leasehold owner of a studio flat in North West London being sold with a lease of fraction over 59 years remaining. Gabriel informally approached his freeholder being a well known Bristol-based freehold company for a lease extension. The landlord indicated a willingness to extend the lease to 125 years subject to a new rent at the outset set at £150 per annum and increase every twenty five years thereafter. No ground rent would be due on a lease extension were Gabriel to exercise his statutory right. Gabriel obtained expert advice and was able to make an informed judgement and deal with the matter and ending up with a market value flat.
North West London case:
Last year we were contacted by Ms K Reed , who
was assigned a lease of a one bedroom flat in North West London in April 2006. The question was if we could approximate the premium would likely be to prolong the lease by a further 90 years. Identical premises in North West London with an extended lease were in the region of £270,000. The average ground rent payable was £55 billed yearly. The lease termination date was on 8 October 2101. Given that there were 75 years outstanding we calculated the premium to the landlord for the lease extension to be between £9,500 and £11,000 exclusive of fees.
North West London case:
Dr A Collins took over the lease of a recently refurbished apartment in North West London in November 2008. We are asked if we could estimate the premium would likely be to prolong the lease by a further 90 years. Identical premises in North West London with 100 year plus lease were in the region of £168,800. The mid-range ground rent payable was £60 collected annually. The lease lapsed in 2081. Given that there were 55 years as a residual term we estimated the compensation to the freeholder for the lease extension to be within £31,400 and £36,200 plus legals.