North East London leases on residential deteriorating in value. Where your lease has in the region of ninety years remaining, you should start considering the need for a lease extension. If lease term is less than 80 years, you will then be required to pay half of the property's 'marriage value' in addition to the usual cost of the lease extension to your landlord. Marriage value is the amount of additional value that a lease extension will add to the property. Leasehold owners in North East London will usually be legally entitled to a lease extension; however a solicitor will confirm if you qualify. In some situations you may not be entitled. There are also strict deadlines and steps to follow once the process has started so it’s prudent to be guided by a conveyancing solicitor during the process.
It is generally accepted that a residential leasehold with over 100 years remaining is worth roughly the equivalent as a freehold. Where an additional ninety years added to all but the shortest lease, the property will be equivalent in value to a freehold for decades to come.
| 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; |
| Godiva Mortgages | 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| 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. |
Engaging our service will provide you enhanced control over the value of your North East London leasehold, as your property will be more valuable and marketable in terms of lease length should you decide to sell. The conveyancers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Freddie was the the leasehold proprietor of a 2 bedroom apartment in North East London on the market with a lease of a little over fifty eight years unexpired. Freddie informally approached his freeholder a well known local-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. No ground rent would be payable on a lease extension were Freddie to invoke his statutory right. Freddie obtained expert advice and was able to make an informed judgement and deal with the matter and ending up with a market value flat.
Mr and Mrs. M Roux acquired a ground floor flat in North East London in April 1999. We are asked if we could estimate the premium would be to extend the lease by an additional years. Comparative flats in North East London with 100 year plus lease were valued about £183,600. The average ground rent payable was £65 invoiced quarterly. The lease ran out in 2081. Having 57 years outstanding we approximated the premium to the landlord for the lease extension to be within £28,500 and £33,000 not including fees.
In 2009 we were contacted by Mrs V Moreau who, having acquired a studio apartment in North East London in November 2004. We are asked if we could estimate the compensation to the landlord would be for a 90 year lease extension. Comparable homes in North East London with 100 year plus lease were in the region of £245,000. The average amount of ground rent was £50 collected monthly. The lease ran out in 2092. Given that there were 68 years remaining we calculated the premium to the landlord to extend the lease to be within £9,500 and £11,000 plus costs.