It’s a harsh truth that a Penge residential lease is a deteriorating asset. As the lease term diminishes so does the value of the property. The extent of this is not fully appreciated in the early years due to the reduction being disguised by increases in the Penge property prices.Where your lease has approximately ninety years left, you need to start thinking about a lease extension. If lease term slips below 80 years, you will then be required to pay half of the property's 'marriage value' on top of the usual cost of the lease extension to the landlord. Marriage value is the amount of extra value that a lease extension will add the property The majority of flat owners in Penge will be able to extend under the legislation; however a conveyancing solicitor should be able to confirm if you qualify for an extension. In some situations you may not be entitled. There are also strict deadlines and procedures to follow once the process is initiated and you will need to be guided by your lawyer throughout the process.
It is conventional wisdom that a residential leasehold with over one hundred years unexpired lease term is worth approximately the same as a freehold. Where an additional ninety years added to any lease with more than 45 years unexpired, the residence will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
Engaging our service gives you increased control over the value of your Penge leasehold, as your property will be more valuable and saleable in relation to the lease length should you wish to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Henry was the the leasehold proprietor of a conversion apartment in Penge being sold with a lease of a few days over fifty eight years left. Henry on an informal basis contacted his freeholder a well known London-based freehold company for a lease extension. The freeholder was prepared to agree an extension on non-statutory terms taking the lease to 125 years subject to an increased rent to £50 yearly. No ground rent would be payable on a lease extension were Henry to exercise his statutory right. Henry obtained expert advice and secured satisfactory deal informally and sell the property.
Dr C Wood moved into a garden flat in Penge in July 1995. We are asked if we could approximate the compensation to the landlord would likely be for a ninety year lease extension. Comparable properties in Penge with an extended lease were in the region of £280,000. The mid-range amount of ground rent was £45 invoiced quarterly. The lease lapsed on 28 February 2095. Given that there were 70 years outstanding we estimated the compensation to the freeholder to extend the lease to be between £12,400 and £14,200 not including fees.
An example of a Lease Extension decision for a Penge premises is Flats 5, 9, 38 & 40 Blakewood Court Anerley Park in January 2012. the tribunal held that the premiums payable for the new lease sare: FLAT 5:- £7,130 FLAT 9:- £7,860 FLAT 38:- £15,867 FLAT 40: £14,834 This case was in relation to 4 flats.