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Main reasons to commence your Peckham lease extension


Why you should commence your Peckham lease extension today:

A Peckham lease depreciates with the years remaining on the lease.

Peckham leases on residential properties are gradually losing value. if your lease has in the region of ninety years unexpired, you should start considering the need for a lease extension. An important point to note is that it is desirable for a lease extension to take place before the term of the current lease dips lower than 80 years - otherwise a higher premium will be due. Flat owners in Peckham will usually qualify for a lease extension; however a solicitor will check if you qualify. In certain circumstances you may not be entitled. There are also strict deadlines and procedures to comply with once the process is triggered so it’s wise to be guided by a conveyancer during the process.

Peckham property with a lease extension has roughly the same value as a freehold

It is generally considered that a property with over 100 years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional 90 years added to any lease with more than 35 years unexpired, the property will be equivalent in value to a freehold for many years in the future.

Mortgage lenders will not loan monies with a short lease

Most banks and building societies require a lengthy amount of time left on any leasehold property before they will consider it as adequate security. Regardless of whether you require a mortgage, you should keep in mind that it is reasonable to assume that someone wanting to buy your property in the future might well do, so in the event that they can't secure a mortgage, then the market price of the property could suffer. In the last decade the majority of mortgage lenders have increased the required minimum lease length that they are prepared to grant a mortgage on

Lender Requirement
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.
Godiva Mortgages 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.
Nationwide Building Society - Our minimum unexpired lease term is 55 years.
- There must be at least 30 years remaining at the end of the mortgage term (regardless of the length of lease at the start).

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 55 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 is 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 55 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 0.5% 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 (does not apply to Shared Ownership)
- 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 charged which is more than on a peppercorn basis

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 0.5% 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 you become aware that it does not meet these requirements, please refer to Issuing Office.
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
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.

What makes us experts in Peckham lease extensions?

Regardless of whether you are a tenant or a landlord in Peckham,the lease extension experts 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 Peckham valuers.

Peckham Lease Extension Case Summaries:

Thomas, Peckham, South East London,

Thomas owned a conversion flat in Peckham being sold with a lease of fraction over 72 years unexpired. Thomas on an informal basis contacted his freeholder a well known Bristol-based freehold company and enquired on a premium to extend the lease. The landlord was keen to give an extension on non-statutory terms taking the lease to 125 years on the basis of a new rent to start with set at £100 per annum and increase every twenty five years thereafter. No ground rent would be payable on a lease extension were Thomas to invoke his statutory right. Thomas obtained expert advice and was able to make an informed judgement and deal with the matter and readily saleable.

Peckham case:

Mr D Collins completed a purpose-built flat in Peckham in June 1999. We are asked if we could estimate the premium would be for a ninety year extension to my lease. Identical homes in Peckham with a long lease were valued about £216,000. The mid-range amount of ground rent was £60 billed per annum. The lease came to a finish in 2080. Considering the 58 years remaining we calculated the compensation to the landlord to extend the lease to be between £28,500 and £33,000 exclusive of costs.

Decision in Southwark

An example of a Freehold Enfranchisement decision for a Peckham flat is 31 Kings Grove in January 2012. By a claim form issued on 11" August 2011 under action number 1LB01618 in the Lambeth County Court the applicant tenants sought dispensation under section 26 of the Leasehold Reform, Housing and Urban Development Act 1993 from the requirement to serve a notice under section 13 of that Act in order to purchase the freehold of the premises. The Tribunal decided the amount payable for the freehold as £10,728 This case related to 2 flats. The number of years remaining on the existing lease(s) was 80.5 years.