It’s a harsh certainty that a Nunhead residential lease is a deteriorating asset. The lease value drops in proportion to its lease length. The extent of this is not fully appreciated in the first few years due to the reduction being disguised by increases in the Nunhead property prices.Once your lease gets to 85ish years, you should start thinking about a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease falls below 80 years - otherwise a higher premium will be due. Most flat owners in Nunhead will be able to extend under the legislation; however a lawyer will be able to confirm whether you qualify for an extension. In some cases you may not qualify. There are also strict timetables and procedures to follow once the process has commenced and you will need to be guided by your lawyer for the duration of the formalities.
It is generally accepted that a property 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 premises will be equivalent in value to a freehold for many years in the future.
| 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. |
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The lawyers that we work with undertake Nunhead 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 lawyer we work with provide it.
Callum owned a conversion flat in Nunhead being marketed with a lease of a little over fifty eight years outstanding. Callum informally spoke with his freeholder being a well known Bristol-based freehold company for a lease extension. The landlord was prepared to agree an extension on non-statutory terms taking the lease to 125 years on the basis of a rise in the rent to £50 per annum. Ordinarily, ground rent would not be payable on a lease extension were Callum to invoke his statutory right. Callum obtained expert legal guidance and was able to make a more informed judgement and deal with the matter and ending up with a market value flat.
In 2013 we were contacted by Ms S Patel who, having acquired a recently refurbished apartment in Nunhead in June 1995. The dilemma was if we could approximate the compensation to the landlord would be to extend the lease by an additional years. Comparative homes in Nunhead with an extended lease were valued around £191,000. The mid-range amount of ground rent was £65 collected yearly. The lease terminated in 2083. Taking into account 58 years left we calculated the premium to the landlord for the lease extension to be within £23,800 and £27,400 exclusive of costs.
An example of a Freehold Enfranchisement case for a Nunhead residence is 41 Endwell Road in March 2013. this matter relateed to the acquisition of the freehold of a mid- terraced Victorian house converted into three separate self-contained dwellings. By an order dated 28/11/2012, Deputy District Judge Cole in the Bromley County Court held that the leaseholders were entitled to acquire the freehold and directed that the premium payable be determined by this Tribunal. The Tribunal assessed the premium to be £14,753 This case affected 3 flats. The unexpired term was 80.01 years.