As the the remaining lease term of a Southwark domestic lease decreases so does its value and therefore the value of your property. Where the residual term has, more than 125 years to run then this decrease may be negligible however there will become a stage when a lease has fewer than 80 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 rational as to why you should extend the lease sooner rather than later. The majority of flat owners in Southwark will qualify for this right; however a conveyancer can confirm whether you qualify for a lease extension. In limited situations you may not qualify, the most frequent reason being that you have not been the owner of the property for two years.
Leasehold properties in Southwark with over one hundred years remaining on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such circumstances there is often little upside in buying the freehold unless savings on ground rent and service charges warrant it.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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; |
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The conveyancers that we work with procure Southwark 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.
During the course of the last few months Arthur, started to get near to the 80-year threshold with the lease on his ground floor apartment in Southwark. Having purchased his flat 18 years previously, the lease term was of little bearing. by good luck, it dawned on him that he would soon be paying an inflated amount for Extending the lease. Arthur arranged for a lease extension just under the wire in July. Arthur and the landlord who owned the flat above ultimately agreed on an amount of £5,000 . If the lease had descended lower than eighty years, the premium would have increased by at least £975.
In 2010 we were e-mailed by Ms Zoe Hall who, having took over the lease of a ground floor flat in Southwark in March 2000. The question was if we could approximate the premium could be for a ninety year extension to my lease. Identical properties in Southwark with an extended lease were valued about £265,000. The average ground rent payable was £50 collected per annum. The lease elapsed on 12 June 2099. Taking into account 73 years left we approximated the premium to the freeholder for the lease extension to be between £9,500 and £11,000 not including legals.
An example of a Freehold Enfranchisement decision for a Southwark flat is 1-41 Royal Tower Lodge 40 Cartwright Street in April 2013. the tribunal adding the agreed value of capitalised ground rents and the reversion the price to be paid for the freehold was £1,187,000 This case affected 41 flats. The unexpired term was 107 years.