It’s an underpublicised truth that a Oval 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 first few years due to the reduction being disguised by increases in the Oval property prices.Where your lease has approximately 90 years left, you need to start thinking about 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 dips under 80 years - otherwise a higher amount will be due. Most leasehold owners in Oval will be able to extend under the legislation; however a conveyancing solicitor will be able to confirm whether you qualify for an extension. In some cases you may not be entitled. There are also strict timeframes and procedures to be adhered to once the process is instigated and you will need to be guided by your lawyer throughout the process.
Leasehold residencies in Oval with more than one hundred years outstanding on the lease are often 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 to be gained by purchasing the freehold unless savings on ground rent and maintenance charges merit it.
| 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; |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 30 years plus the term of the mortgage at the outset 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 |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The conveyancers that we work with handle Oval lease extensions and help protect your position. A lease extension can be arranged to be completed to coincide with a change of ownership so the costs of the lease extension are paid for using part of the sale proceeds. You really do need expert legal advice in this difficult and technical area of law. The lawyer we work with provide it.
Hunter was the the leasehold proprietor of a high value flat in Oval being marketed with a lease of fraction over sixty years left. Hunter informally approached his landlord being a well known Bristol-based freehold company and enquired on a premium to extend the lease. The landlord indicated a willingness to extend the lease to 125 years on the basis of a rise in the rent to £200 annually. Ordinarily, ground rent would not be payable on a lease extension were Hunter to invoke his statutory right. Hunter obtained expert legal guidance and was able to make an informed decision and handle with the matter and ending up with a market value flat.
Last month we were phoned by Mrs K Vincent , who bought a first floor flat in Oval in March 1995. The question was if we could approximate the compensation to the landlord would likely be to prolong the lease by a further 90 years. Comparative properties in Oval with an extended lease were worth £250,400. The mid-range ground rent payable was £65 invoiced annually. The lease expired on 17 August 2090. Considering the 64 years unexpired we estimated the premium to the landlord to extend the lease to be within £19,000 and £22,000 plus fees.
An example of a Lease Extension decision for a Oval flat is Ground Floor Flat 39 Bronsart Road in May 2010. Following a vesting order by West London County Court the Leasehold Valuation Tribunal concluded that the price to be paid for the extended lease of the premises was Thirteen Thousand Two hundred pounds (£13,200) in accordance with the valuation. The extended lease was granted for a term of 90 years from the expiry date of the Lease and at a peppercorn ground rent from the date of the vesting order. This case affected 1 flat. The unexpired term as at the valuation date was 74.77 years.