If you are facing a significant premium because your lease in Poplar 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 Poplar lease extension today:
A Poplar lease depreciates with the years remaining on the lease.
The nearer a residential lease in Poplar nears to zero years unexpired, the the greater the reduction in the value of the property. If the lease has, in excess of 125 years to run then this decrease may be fractional nevertheless there will become a point in time when a lease has fewer than eighty years left as part of the premium you will incur is what is termed as a marriage value. This could be significant. It is the main logic behind why you should extend the lease without delay. Many flat owners in Poplar will qualify for this right; that being said a lawyer can advise whether you qualify for a lease extension. In limited situations you may not qualify, the most common reason being that you have not been the owner of the property for two years.
An extended lease is almost the same value as a freehold
It is conventional wisdom that a property with in excess of 100 years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional ninety years added to any lease with more than 45 years left, the property will be equivalent in value to a freehold for decades to come.
Lending institutions may not issue a mortgage on a short lease
Most high street banks are making their criteria more stringent and a meaningful number now want flats to have at least 60 if not 70 years left at the end of the mortgage. As a number of flats in Poplar were built in the 1950s, 1960s and 1970s this means many now need to be extended if they if they are to be mortgageable.
| Lender |
Requirement
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|---|
| Barnsley Building Society |
60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term.
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| 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.
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| Halifax |
Minimum 70 years from the date of the mortgage.
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| Nationwide Building Society |
- Our minimum unexpired lease term is 55 years, except where lending is over 85% of the purchase price/valuation on a second hand flat, in which case our minimum unexpired term is 90 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
- Where lending is over 85% of the purchase price/valuation on a second hand flat and the unexpired lease term on the offer is 90 years or more - only advise us if the actual lease term is less than 90 years.
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
- Unexpired lease term less than 90 years where we are lending more than 85% of the purchase price/valuation on a second hand flat
- 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 1% 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 (Minimum 90 years where we are lending more than 85% of the purchase price/valuation on a second hand flat)
- 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 1% 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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| TSB |
Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption.
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Get in touch with one of our Poplar lease extension solicitors or enfranchisement solicitors
The conveyancing solicitors that we work with procure Poplar 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 conveyancing solicitor we work with provide it.
Poplar Lease Extension Example Cases:
Michael, Poplar, London
In 2014 Michael, came precariously close to the eighty-year mark with the lease on his basement flat in Poplar. In buying his home two decades ago, the length of the lease was of little bearing. Fortunately, he recognised he needed to take action soon on a lease extension. Michael arranged for a lease extension just in the nick of time in August. Michael and the landlord eventually settled on the final figure of £6,000 . If he failed to meet the deadline, the premium would have escalated by at least £975.
Poplar case:
Dr Imogen Simon purchased a ground floor apartment in Poplar in February 1996. The dilemma was if we could shed any light on how much (approximately) compensation to the landlord would be for a 90 year lease extension. Comparable homes in Poplar with an extended lease were valued around £191,000. The average ground rent payable was £65 collected per annum. The lease lapsed in 2084. Taking into account 58 years remaining we estimated the premium to the landlord for the lease extension to be within £23,800 and £27,400 not including professional charges.
Decision in Southwark
An example of a Freehold Enfranchisement case for a Poplar flat is
12, 14 & 16 Hull Close in May 2010. the Tribunal determined that the premium payable for the
acquisition of the freehold to the subject premises was the sum
of £18,300
This case affected 3 flats. The unexpired residue of the current lease was 101.61 years.