It’s an underpublicised truth that a Hockley residential lease is a deteriorating asset. As the lease term reduces so does the value of the property. The extent of this is taken for granted in the first few years due to the loss of value being disguised by increases in the Hockley property prices.Once your lease gets to 85ish years, you should start thinking about a lease extension. If lease term slips under 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. The marriage fee is the amount of extra value that a lease extension will add the property The majority of flat owners in Hockley will be able to extend under the legislation; however a lawyer should be able to clarify if you are eligibility. In some cases you may not be entitled. There are also strict timeframes and procedures to follow once the process is instigated and you will need to be guided by your lawyer for the duration of the formalities.
It is generally accepted that a property with in excess of one hundred years unexpired lease term is worth roughly the equivalent as a freehold. Where an further 90 years added to any lease with more than 30 years remaining, the property will be equivalent in value to a freehold for decades to come.
Lender | Requirement |
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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. |
Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
Royal Bank of Scotland | Mortgage term plus 30 years. |
Regardless of whether you are a tenant or a freeholder in Hockley,the lease extension solicitors that we work with will always be prepared to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Hockley valuers.
Arthur owned a 2 bedroom apartment in Hockley being marketed with a lease of a few days over 59 years outstanding. Arthur informally spoke with his freeholder a well known Manchester-based freehold company for a lease extension. The freeholder indicated a willingness to grant an extension taking the lease to 125 years subject to an increased rent to £125 annually. Ordinarily, ground rent would not be due on a lease extension were Arthur to exercise his statutory right. Arthur procured expert legal guidance and secured satisfactory deal informally and sell the property.
Mrs Isabel Mitchell purchased a one bedroom flat in Hockley in February 2007. The dilemma was if we could shed any light on how much (approximately) compensation to the landlord would be to prolong the lease by ninety years. Similar properties in Hockley with a long lease were valued around £254,200. The mid-range ground rent payable was £60 invoiced monthly. The lease ran out in 2076. Taking into account 51 years remaining we estimated the compensation to the landlord to extend the lease to be between £43,700 and £50,600 not including professional charges.
Last Autumn we were contacted by Dr Nicole Alexander , who was assigned a lease of a ground floor apartment in Hockley in January 2006. We are asked if we could approximate the premium would likely be to prolong the lease by 90 years. Comparative flats in Hockley with a long lease were valued around £210,600. The average amount of ground rent was £45 invoiced quarterly. The lease concluded in 2087. Having 62 years unexpired we calculated the compensation to the freeholder to extend the lease to be between £18,100 and £20,800 exclusive of fees.