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Top reasons for Dalston lease extension


Top reasons for lease extension now:

Increase your lease and increase your Dalston property value

It’s a harsh truth that a Dalston residential lease is a deteriorating asset. As the lease term reduces so does the value of the property. The extent of this is not fully appreciated in the first few years due to the depreciation being disguised by increases in the Dalston property market.Once your lease gets to 85ish years, you need to start considering a lease extension. If the number of years remaining falls below eighty years, you will then be required to pay 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of extra value that a lease extension will add the property Most flat owners in Dalston will be able to extend under the legislation; however a conveyancer should be able to clarify whether you are eligibility. In some cases you may not qualify. There are also strict timeframes and procedures to follow once the process is initiated and you will need to be guided by your conveyancing solicitor for the duration of the formalities.

An extended lease is almost the same value as a freehold

Leasehold premises in Dalston with more than 100 years remaining on the lease are often regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such situations there is often little to be gained by purchasing the reversionary interest unless savings on ground rent and service charges justify it.

Mortgage lenders may decide not to issue a mortgage with a short lease

Most banks have narrowed their lending criteria in the last ten years and borrowers are encountering difficulties in arranging finance or re-mortgage against property with shorter lease terms, particularly below seventy years as they are considered to be unacceptable security.

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.
Bank of Scotland Minimum 70 years from the date of the mortgage.
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.
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

Why use us for your lease extension in Dalston?

Using our service gives you better control over the value of your Dalston leasehold, as your property will be more valuable and saleable in relation to the lease length should you wish to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.

Dalston Lease Extension Example Cases:

Austin, Dalston, London,

Austin owned a studio flat in Dalston being sold with a lease of a little over 61 years unexpired. Austin on an informal basis contacted his freeholder being a well known Manchester-based freehold company and enquired on a premium to extend the lease. The freeholder indicated a willingness to grant an extension taking the lease to 125 years on the basis of an increased rent to £100 annually. No ground rent would be payable on a lease extension were Austin to invoke his statutory right. Austin procured expert legal guidance and secured an acceptable deal without resorting to tribunal and readily saleable.

Dalston case:

Mr and Mrs. Y Gómez took over the lease of a ground floor flat in Dalston in March 2009. We are asked if we could shed any light on how much (approximately) price could be for a ninety year lease extension. Comparable properties in Dalston with a long lease were valued around £171,800. The average amount of ground rent was £55 collected per annum. The lease concluded in 2075. Taking into account 50 years left we calculated the premium to the landlord for the lease extension to be between £33,300 and £38,400 plus expenses.

Decision in Hackney

An example of a Freehold Enfranchisement case for a Dalston property is 150 Amhurst Road in December 2013. The tribunal concluded that the premium to be paid by the applicant for the enfranchisement of the subject property was £43,500. This case related to 4 flats. The remaining number of years on the lease was 90 (or thereabouts).