Unfortunately that a Old Ford residential lease is a wasting asset. The lease value reduces in proportion to its lease length. The extent of this is not fully appreciated in the first few years due to the loss of value being disguised by increases in the Old Ford property market.Once your lease nears 85ish years, you should start considering a lease extension. If the number of years remaining slips under 80 years, you will end up paying half of the property's 'marriage value' on top of the usual cost of the lease extension to the landlord. The marriage fee is the amount of additional value that a lease extension will add the property Most leasehold owners in Old Ford 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 conveyancer throughout the formalities.
It is generally considered that a property with more than one hundred years remaining is worth approximately the equivalent as a freehold. Where an further 90 years added to all but the shortest lease, the premises will be equivalent in value to 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. |
| 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 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
The conveyancing solicitors that we work with procure Old Ford 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 conveyancer we work with provide it.
Last year Henry, started to get near to the eighty-year mark with the lease on his purpose- built apartment in Old Ford. In buying his home twenty years ago, the unexpired term was of little bearing. Luckily, he became aware that he needed to take steps soon on Extending the lease. Henry was able to extend his lease just under the wire last April. Henry and the landlord who owned the flat above ultimately agreed on the final figure of £5,000 . If the lease had gone lower than 80 years, the premium would have gone up by a minimum £1,125.
Ms Y Garcia took over the lease of a one bedroom apartment in Old Ford in July 2005. We are asked if we could approximate the premium would be for a ninety year lease extension. Similar homes in Old Ford with an extended lease were worth £285,000. The average ground rent payable was £55 collected quarterly. The lease lapsed in 2106. Given that there were 80 years remaining we estimated the compensation to the landlord to extend the lease to be between £12,400 and £14,200 exclusive of legals.
An example of a Freehold Enfranchisement case for a Old Ford residence is 26 Rhondda Grove in June 2009. The net price payable by the leaseholders as determined by the Tribunal was £3,015.13. This comprised £11,300 premium for the reversion less £8,284.87 costs as ordered by the County Court.