It’s a harsh truth that a Purley residential lease is a wasting 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 depreciation being disguised by increases in the Purley property market.Where your lease has approximately ninety years left, you should start thinking about a lease extension. If lease term drops under eighty 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 extra value that a lease extension will add the property The majority of flat owners in Purley will be able to extend under the legislation; however a lawyer will be able to clarify if you qualify for an extension. In some situations you may not be entitled. There are also strict deadlines and procedures to be adhered to once the process has commenced and you will need to be guided by your conveyancing solicitor for the duration of the process.
It is generally accepted that a property with more than 100 years unexpired lease term is worth approximately the equivalent as a freehold. Where an further 90 years added to any lease with more than 45 years unexpired, the property will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| 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; |
| Coventry Building Society | 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 30 years plus the term of the mortgage at the outset of the mortgage. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
| 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. |
Retaining our service gives you increased control over the value of your Purley leasehold, as your property will be more valuable and marketable in relation to the lease length should you decide to sell. The lawyers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
After unsuccessful negotiations with the freeholder of her studio flat in Purley, Charlotte started the lease extension process as the eighty year mark was swiftly approaching. The legal work was concluded in January 2007. The landlord’s costs were negotiated to about 650 pounds.
Last Winter we were contacted by Dr Sebastian Ward , who purchased a studio apartment in Purley in March 2005. The dilemma was if we could approximate the compensation to the landlord would likely be for a 90 year extension to my lease. Identical flats in Purley with a long lease were valued around £255,000. The mid-range amount of ground rent was £50 collected monthly. The lease lapsed in 2096. Given that there were 70 years unexpired we calculated the compensation to the landlord to extend the lease to be between £9,500 and £11,000 plus legals.
An example of a Freehold Enfranchisement matter before the tribunal for a Purley property 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 number of years remaining on the existing lease(s) was 78.32 years.