The market value of a leasehold property in Wallington depends on how long the lease has left to run. If it is close to or less than 80 years you should envisage difficulties on re-sale, so it is recommended to arrange for the lease to be extended ahead of purchasing. It is ideal to start the lease extension process when a lease still has 82 years to run so that formalities can be finalised well before the eighty year cut off point. Current legislation enables Wallington qualifying lessees to obtain a lease extension of ninety years in addition to the remaining lease term at a peppercorn rent (that is, rent free). The intention of the valuation is to arrive at an opinion of the sum payable by the lessee to the freeholder for the acquisition of the lease extension.
It is generally accepted that a property with more than one hundred years remaining is worth approximately the equivalent as a freehold. Where an additional 90 years added to all but the shortest lease, the residence will be equivalent in value to a freehold for many years in the future.
| 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. |
| 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. |
| 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 Wallington 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.
Last October Max, came perilously near to the 80-year threshold with the lease on his purpose- built apartment in Wallington. Having purchased his property two decades ago, the unexpired term was of little relevance. Luckily, he noticed he needed to take action soon on Extending the lease. Max was able to extend his lease just under the wire in July. Max and the landlord who owned the flat above eventually agreed on sum of £5,500 . If the lease had dropped to less than 80 years, the premium would have become more costly by at least £850.
Last year we were called by Mr John Thomas , who was assigned a lease of a recently refurbished apartment in Wallington in January 2008. The dilemma was if we could estimate the premium could be to prolong the lease by an additional years. Similar homes in Wallington with 100 year plus lease were in the region of £210,000. The mid-range ground rent payable was £50 invoiced annually. The lease finished on 4 November 2105. Considering the 80 years left we calculated the premium to the landlord for the lease extension to be within £8,600 and £9,800 exclusive of legals.
An example of a Freehold Enfranchisement case for a Wallington premises is 21 & 23 Carshalton Grove in May 2009. the Tribunal adopted the figures presented as the premiums payable by the Applicant i.e. a total of £20,750. This case was in relation to 2 flats. The number of years remaining on the existing lease(s) was 72 years.