Mill Hill 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 becomes more expensive. The majority of owners of residential leasehold property in Mill Hill enjoy rights under legislation to extend the terms of their leases. If you are a leasehold owner in Mill Hill you would be well advised to see if your lease has between 70 and 90 years remaining. In particular once the remaining lease term slips under eighty years, the cost of any lease extension increases dramatically as an element of the premium you will incur is what is known as a marriage value
It is generally accepted that a property with over one hundred years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional ninety years added to any lease with more than 35 years remaining, the property will be worth the same as a freehold for many years in the future.
| 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| 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 |
| 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 lawyers that we work with procure Mill Hill 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.
Last year Eliot, started to get close to the eighty-year mark with the lease on his purpose- built flat in Mill Hill. Having bought his home two decades ago, the length of the lease was of no significance. Fortunately, he noticed he needed to take steps soon on a lease extension. Eliot extended the lease just under the wire last June. Eliot and the freeholder subsequently settled on a premium of £5,000 . If the lease had descended below 80 years, the sum would have escalated by at least £1,150.
In 2009 we were contacted by Ms H Johnson who, having acquired a one bedroom apartment in Mill Hill in May 2002. The question was if we could estimate the compensation to the landlord would be for a 90 year extension to my lease. Comparable premises in Mill Hill with an extended lease were in the region of £191,400. The mid-range amount of ground rent was £55 collected every twelve months. The lease expired in 2079. Considering the 54 years remaining we approximated the premium to the freeholder for the lease extension to be within £34,200 and £39,600 not including legals.
An example of a Lease Extension decision for a Mill Hill premises is Ground Floor Maisonette 17 Milton Road in January 2014. The Tribunal determined the premium payable by the Applicant to the should be £13,299 This case was in relation to 1 flat. The unexpired term was 71.73 years.