Owning a flat usually means owning a lease of the property, this is a ‘time-limited’ interest becoming shorter every day. your lease will usually be granted for a set period of time , usually 99 or 125 years, although we have come across longer and shorter terms in South Lambeth. Inevitably, the period of lease left shortens as time goes by. This is often overlooked and only raises itself as an issue when the property has to be sold or re-mortgaged. The fewer the years remaining the less it is worth and the more expensive it will be to extend the lease. Eligible long lease owners in South Lambeth have the right to extend the lease for a further ninety years under legislation. You should give careful attention before delaying your South Lambeth lease extension. Putting off the cost now only increases the price you will eventually have to pay for a lease extension
Leasehold premises in South Lambeth with over one hundred years unexpired on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such circumstances there is often little to be gained by buying the reversionary interest unless savings on ground rent and maintenance charges justify it.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| 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; |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| 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 will provide you increased control over the value of your South Lambeth leasehold, as your property will be more valuable and marketable in relation to the lease length should you want to sell. The conveyancing solicitors that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Last October Jonathan, came precariously close to the 80-year mark with the lease on his two bedroom apartment in South Lambeth. In buying his flat 18 years ago, the lease term was of minimal relevance. Luckily, he realised he needed to take steps soon on a lease extension. Jonathan was able to extend his lease just in the nick of time last March. Jonathan and the landlord subsequently agreed on an amount of £5,500 . If the lease had fallen to less than eighty years, the premium would have increased by at least £1,125.
Last month we were called by Dr J Harris , who owned a one bedroom flat in South Lambeth in July 2009. The question was if we could approximate the premium would likely be to extend the lease by 90 years. Comparable residencies in South Lambeth with a long lease were worth £270,000. The average ground rent payable was £55 billed monthly. The lease terminated in 2100. Having 75 years outstanding we calculated the premium to the landlord to extend the lease to be between £9,500 and £11,000 exclusive of professional charges.
Last Winter we were phoned by Ms Molly Watson , who completed a studio flat in South Lambeth in March 2003. We are asked if we could shed any light on how much (approximately) price could be for a 90 year lease extension. Similar residencies in South Lambeth with an extended lease were worth £173,800. The average amount of ground rent was £60 billed annually. The lease terminated on 9 April 2080. Considering the 55 years unexpired we calculated the compensation to the landlord for the lease extension to be within £31,400 and £36,200 not including expenses.