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Why you should start your Willesden lease extension


Why you should start your Willesden lease extension today:

Increase your lease and increase your Willesden property value

Willesden leases on residential properties are gradually losing value. Where your lease has in the region of ninety years unexpired, you should start thinking about a lease extension. It is important to recognise that it is that it is desirable for your lease extension to take place before the term of the existing lease falls lower than eighty years - otherwise a higher amount will be payable. Leasehold owners in Willesden will usually qualify for a lease extension; however a solicitor will confirm if you qualify. In some situations you may not be entitled. There are also strict timetables and steps to comply with once the process is triggered so it’s best to be guided by a conveyancing solicitor during the process.

An extended lease is almost the same value as a freehold

It is conventional wisdom that a residential leasehold with more than 100 years unexpired lease term is worth roughly the same as a freehold. Where an further ninety years added to any lease with more than 30 years left, the property will be worth the same as a freehold for decades to come.

Lending institutions may not finance a property with a short lease

Banks and building societies are really clamping down as regards to homes in Willesden with short leases. For example you may find that their lending requirements are stricter and that they adjust interest rates depending on the unexpired lease term. Some may even refrain from lending completely, so where you wanted to sell, your remaining options would be to find a cash buyer, or try your luck at auction thus limiting the number of prospective buyers.

Lender Requirement
Leeds Building Society 85 years remaining from the start of the mortgage.
National Westminster Bank Mortgage term plus 30 years.
The Mortgage Works Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:

Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer

New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer

Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.

SECOND HAND PROPERTIES

Unacceptable - advise Issuing Office (Will be declined):
- Unexpired lease term less than 70 years
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period less than or equal to 5 years

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than 85 years
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI

NEW BUILD PROPERTIES (includes office conversions)

Unacceptable - advise Issuing Office (will be declined):
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house
- Any lease which is subject to a ground rent (or annual rent) being charged which is more than on a peppercorn basis
- Any lease which is subject to a ground rent (or annual rent) being reviewed and altered on any review basis or methodology

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- A lease subject to a peppercorn ground rent (annual rent) charges

For the avoidance of doubt, any new build properties completed but not sold pre 30 June 2022 will only be acceptable if the lease conforms to the above guidance

* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years

LEASE EXTENSIONS

We require all lease extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where you become aware that it does not meet these requirements, please refer to the Issuing Office
Royal Bank of Scotland Mortgage term plus 30 years.
Virgin 85 years at the time of completion. If it's less, we require it to be extended on or before completion.

What makes us experts in Willesden lease extensions?

The conveyancers that we work with handle Willesden 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 conveyancer we work with provide it.

Willesden Lease Extension Example Cases:

Lily, Willesden, North West London,

Subsequent to protracted correspondence with the landlord of her ground floor flat in Willesden, Lily initiated the lease extension process as the eighty year deadline was quickly nearing. The lease extension was concluded in April 2005. The landlord’s fees were restricted to a tad over 450 GBP.

Willesden case:

Last Autumn we were approach by Mr and Mrs. O James , who acquired a one bedroom flat in Willesden in November 2008. The dilemma was if we could estimate the compensation to the landlord would be for a 90 year lease extension. Identical flats in Willesden with 100 year plus lease were worth £205,000. The average amount of ground rent was £50 collected yearly. The lease finished in 2103. Having 79 years outstanding we approximated the premium to the freeholder for the lease extension to be within £7,600 and £8,800 exclusive of professional charges.

Decision in Brent

An example of a lease Extension decision for a Willesden flat is First Floor Flat 47 Huddlestone Road in December 2010. the Tribunal a valuation of £13,000 for a lease extension having been asked to consider the premium following a vesting order being granted by Willesden County Court On 14th September 2009 This case affected 1 flat. The unexpired residue of the current lease was 71.87 years.