For anyone whose Bermondsey property is held on a long lease, our message is clear – if you do nothing, the property will eventually revert to the freeholder, leaving you empty-handed. The fewer the years remaining the lower the value of the property and the more expensive it will be to extend the lease.
It is conventional wisdom that a residential leasehold with more than 100 years remaining is worth roughly the same as a freehold. Where an further ninety years added to any lease with more than 45 years remaining, the property will be worth the same as a freehold for many years ahead.
| 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; |
| 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
The lawyers that we work with undertake Bermondsey 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 lawyer we work with provide it.
Rory was the the leasehold proprietor of a high value apartment in Bermondsey on the market with a lease of fraction over fifty eight years unexpired. Rory on an informal basis contacted his landlord a well known London-based freehold company for a lease extension. The landlord indicated a willingness to grant an extension taking the lease to 125 years on the basis of a new rent initially set at £100 per annum and doubled every 25 years thereafter. Ordinarily, ground rent would not be payable on a lease extension were Rory to exercise his statutory right. Rory obtained expert legal guidance and secured an acceptable resolution informally and readily saleable.
In 2011 we were called by Mr and Mrs. D Young who, having owned a studio flat in Bermondsey in November 2009. The question was if we could estimate the price would likely be for a 90 year lease extension. Comparative properties in Bermondsey with an extended lease were worth £200,000. The mid-range amount of ground rent was £50 billed per annum. The lease ran out in 2102. Taking into account 78 years unexpired we calculated the compensation to the landlord to extend the lease to be within £8,600 and £9,800 not including fees.
An example of a Freehold Enfranchisement decision for a Bermondsey 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 was in relation to 41 flats. The unexpired term as at the valuation date was 107 years.