The market value of Merton Park leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The expense of a lease extension can escalate materialy once the remaining term is less than 80 years
It is generally accepted that a property with over one hundred years remaining is worth approximately the equivalent as a freehold. Where an additional 90 years added to any lease with more than 30 years left, the premises will be worth the same as a freehold for many years ahead.
| 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. |
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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; |
| 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| Yorkshire 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. |
The conveyancers that we work with handle Merton Park 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 conveyancing solicitor we work with provide it.
After lengthy negotiations with the freeholder of her basement apartment in Merton Park, Morgan initiated the lease extension process just as the lease was coming close to the critical eighty-year mark. The lease extension completed in February 2007. The landlord’s charges were kept to an absolute minimum.
In 2011 we were approached by Mrs E Bonnet who, having bought a ground floor apartment in Merton Park in June 2007. We are asked if we could estimate the premium would likely be for a ninety year extension to my lease. Identical residencies in Merton Park with 100 year plus lease were in the region of £189,000. The average amount of ground rent was £55 collected yearly. The lease ended on 19 January 2079. Taking into account 53 years unexpired we approximated the compensation to the freeholder for the lease extension to be within £28,500 and £33,000 plus fees.
An example of a Lease Extension matter before the tribunal for a Merton Park premises is 14 Nutwell Street in January 2014. The premium payable for the acquisition of a new lease of the subject premises was in the sum of £30,523 This case was in relation to 1 flat. The unexpired term was 62.94 years.