Putney leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of the lease gets more expensive. It is the case that most Putney tenants have the right to extend their lease by an additional 90 years by virtue of the 1993 Leasehold Reform Act. If you are a leasehold owner in Putney you should see if your lease has between 70 and ninety years left. In particular once the remaining lease term slips under eighty years, the premium due on any lease extension sharply increases as an element of the premium you will incur is what is known as a marriage value
It is conventional wisdom that a property with more than one hundred years remaining is worth roughly the equivalent as a freehold. Where an additional ninety years added to all but the shortest lease, the premises will be equivalent in value to a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
| 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| 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. |
Using our service gives you increased control over the value of your Putney leasehold, as your property will be more valuable and saleable in terms of lease length should you wish to sell. The conveyancers that we work with have a in-depth market knowledge handling many hundreds of lease extensions or freehold purchase transactions.
Last October Caleb, came dangerously close to the eighty-year threshold with the lease on his studio flat in Putney. Having bought his flat 19 years previously, the unexpired term was of little interest. Thankfully, he realised he needed to take action soon on a lease extension. Caleb extended the lease just under the wire last May. Caleb and the landlord who owned the flat above in the end agreed on an amount of £6,000 . If he had missed the deadline, the sum would have escalated by a minimum £850.
Last Spring we were e-mailed by Dr L Taylor , who took over the lease of a one bedroom apartment in Putney in February 2006. We are asked if we could estimate the compensation to the landlord would be for a 90 year lease extension. Comparative premises in Putney with an extended lease were in the region of £300,000. The average amount of ground rent was £50 collected every twelve months. The lease elapsed on 22 April 2102. Given that there were 76 years remaining we calculated the compensation to the landlord to extend the lease to be within £8,600 and £9,800 exclusive of legals.
An example of a Freehold Enfranchisement case for a Putney residence is 19 St. Margarets Crescent in August 2010. the tribunal was of the view that the premium to be paid by the leaseholder for the freehold reversion was £51,983.00 This case was in relation to 3 flats. The unexpired lease term was 66.25 years.