The market value of a leasehold property in Poplar is impacted by how long the lease has remaining. If it is close to or less than 80 years you should foresee problems on re-sale, so it is advisable to arrange for a lease extension prior to buying. It is preferable to commence the lease extension process when the lease still has 82 years to run so that all matters can be finalised prior to the eighty year mark. Current legislation enables Poplar qualifying lessees to an additional term of ninety years in addition to the existing term, at a notional rent (no ground rent). The intention of the valuation is to arrive at an opinion of the premium payable by the lessee to the freeholder for the acquisition of the lease extension.
It is conventional wisdom that a residential leasehold with more than one hundred years remaining is worth roughly the equivalent as a freehold. Where an further 90 years added to any lease with more than 45 years remaining, the premises will be equivalent in value to a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage should be declined (see exception below). Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office. 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Halifax | Minimum 70 years from the date 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. |
| 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 |
The lawyers 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.
16 months ago Adam, came critically near to the eighty-year threshold with the lease on his two bedroom apartment in Poplar. In buying his flat 18 years previously, the length of the lease was of no concern. Fortunately, it dawned on him that he needed to take steps soon on a lease extension. Adam extended the lease just under the wire last May. Adam and the freeholder ultimately settled on the final figure of £6,000 . If the lease had descended to less than 80 years, the premium would have escalated by at least £1,050.
Last Christmas we were e-mailed by Ms Isabella Dupont , who bought a purpose-built flat in Poplar in March 2001. The question was if we could estimate the premium would likely be for a 90 year lease extension. Similar residencies in Poplar with an extended lease were in the region of £183,600. The average amount of ground rent was £65 billed per annum. The lease terminated in 2082. Taking into account 57 years remaining we estimated the premium to the freeholder to extend the lease to be between £28,500 and £33,000 not including costs.
An example of a Freehold Enfranchisement decision for a Poplar residence 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 was in relation to 3 flats. The unexpired term was 101.61 years.