The market value of a leasehold property in Purley depends on how long the lease has remaining. If it is close to or less than 80 years you should foresee difficulties on re-sale, so it is recommended to arrange for the lease to be extended ahead of purchasing. It is preferable to start the lease extension process when the lease still has 82 years unexpired so that a lease extension can be addressed in advance of the 80 year cut off point. Statute entitles Purley qualifying lessees to an additional term of ninety years in addition to the remaining term, at a peppercorn rent (no ground rent). The reason of the valuation is to determine the premium payable by the lessee to the freeholder for the acquisition of the lease extension.
Leasehold properties in Purley with more than one hundred years left on the lease are often referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your property. In such situations there is often little to be gained by purchasing the reversionary interest unless savings on ground rent and service charges warrant it.
| Lender | Requirement |
|---|---|
| Chelsea 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. |
| 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. |
| 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. |
| 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. |
The conveyancers that we work with procure Purley 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.
Eli was the the leasehold owner of a studio apartment in Purley on the market with a lease of just over 72 years remaining. Eli on an informal basis contacted his landlord a well known London-based freehold company and enquired on a premium to extend the lease. The landlord indicated a willingness to grant an extension taking the lease to 125 years subject to an increased rent to £200 per annum. No ground rent would be payable on a lease extension were Eli to exercise his statutory right. Eli procured expert legal guidance and secured satisfactory deal without going to tribunal and sell the flat.
Last Christmas we were phoned by Dr S Martinez , who bought a garden apartment in Purley in May 2009. The dilemma was if we could shed any light on how much (roughly) compensation to the landlord could be for a ninety year lease extension. Comparative flats in Purley with a long lease were worth £225,400. The average ground rent payable was £45 billed yearly. The lease ran out in 2089. Taking into account 64 years unexpired we approximated the premium to the landlord to extend the lease to be between £16,200 and £18,600 exclusive of professional charges.
An example of a Freehold Enfranchisement matter before the tribunal for a Purley residence is The Woodlands 95 Purley Park Road in April 2009. The Tribunals own valuation produced the figure of £37,912. This case was in relation to 6 flats. The unexpired term as at the valuation date was 78.32 years.