Homerton leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of the lease gets more expensive. It is the case that most Homerton tenants have the right to extend their lease by an additional ninety years under the 1993 Leasehold Reform Act. If you are a leasehold owner in Homerton you must investigate if your lease has between seventy and ninety years left. In particular once the remaining lease term slips under 80 years, the amount payable for any lease extension increases dramatically as an element of the premium you pay is what is known as a marriage value
Leasehold properties in Homerton with more than one hundred years unexpired on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such situations there is often little upside in buying the reversionary interest unless savings on ground rent and service charges justify it.
| 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. |
| 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. |
| Halifax | 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 |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Irrespective of whether you are a tenant or a landlord in Homerton,the lease extension solicitors that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Homerton valuers.
Arthur owned a studio apartment in Homerton on the market with a lease of a little over fifty eight years unexpired. Arthur on an informal basis spoke with 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 subject to a rise in the rent to £50 per annum. Ordinarily, ground rent would not be due on a lease extension were Arthur to exercise his statutory right. Arthur procured expert advice and was able to make an informed decision and deal with the matter and readily saleable.
In 2012 we were called by Mrs Catherine Brooks who, having bought a basement apartment in Homerton in August 2004. We are asked if we could approximate the compensation to the landlord could be for a ninety year lease extension. Similar homes in Homerton with 100 year plus lease were worth £275,000. The mid-range amount of ground rent was £55 invoiced monthly. The lease expiry date was on 23 November 2101. Taking into account 76 years unexpired we calculated the compensation to the freeholder for the lease extension to be between £9,500 and £11,000 plus costs.
An example of a Freehold Enfranchisement decision for a Homerton premises is 104 Nightingale Road in May 2009. The Tribunal's Decision is that the premium torbe paid for the enfranchisement in this case is £112,174 This case was in relation to 10 flats. The unexpired residue of the current lease was 71.25 years.