If you are facing a significant premium because your lease in South West London has dropped toward the 80-year mark, your previous lawyer may be at fault. Our panel of experts specialise in recovering lease extension costs from negligent firms who failed to protect your investment.
Why you should start your South West London lease extension today:
Increase your lease and increase your South West London property value
South West London leases on domestic deteriorating in value. if your lease has about 90 years unexpired, you should start thinking about a lease extension. Eighty years is a significant number: when the remaining term of a lease dips below this level then you begin paying an additional element called marriage value. Leasehold owners in South West London will mostly qualify for a lease extension; however a solicitor should be able check your eligibility. In some situations you may not be entitled. There are prescribed deadlines and formalities to follow once the process has commenced so it’s best to be guided by a conveyancing solicitor during the process.
South West London property with a lease extension has roughly the same value as a freehold
Leasehold premises in South West London with in excess of 100 years outstanding on the lease are often regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such circumstances there is often little to be gained by buying the reversionary interest unless savings on ground rent and service charges merit it.
Mortgage lenders will not loan monies on a short lease
Lenders are really clamping down as regards to homes in South West London with short leases. For example you may find that their lending requirements are stricter and that they alter interest rates depending on how many years are left on the lease. Some may even refuse to lend completely, so if you wanted to sell, your remaining options would be to find a cash purchaser, or try your luck at auction thus reducing the number of potential buyers.
| Lender |
Requirement
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|---|
| 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.
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| 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.
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| The Mortgage Works |
Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:
Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer
New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer
Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.
SECOND HAND PROPERTIES
Unacceptable - advise Issuing Office (Will be declined):
- Unexpired lease term less than 70 years
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period less than or equal to 5 years
Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary
Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than 85 years
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI
NEW BUILD PROPERTIES (includes office conversions)
Unacceptable - advise Issuing Office (will be declined):
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house
- Any lease which is subject to a ground rent (or annual rent) being charged which is more than on a peppercorn basis
- Any lease which is subject to a ground rent (or annual rent) being reviewed and altered on any review basis or methodology
Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary
Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- A lease subject to a peppercorn ground rent (annual rent) charges
For the avoidance of doubt, any new build properties completed but not sold pre 30 June 2022 will only be acceptable if the lease conforms to the above guidance
* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years
Lease Extensions We require all Lease Extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where a proposed Lease Extension does not meet these requirements, however you feel that this is in the best interest for our mutual client, please refer all details to the Issuing Office for us to consider.
Please ensure that all lender enquiries are submitted (with full documentation/requirements) at least 2 weeks prior to exchange to allow sufficient time for review and decisioning.
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| Virgin |
85 years at the time of completion. If it's less, we require it to be extended on or before completion.
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| 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.
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Get in touch with one of our South West London lease extension solicitors or enfranchisement solicitors
Lease extensions in South West London can be a difficult process. We recommend you secure guidance from a lawyer and valuer with experience in lease extensions.
We provide you with an expert from a selection of lease extension solicitors, which ensures a targeted and efficient service as you have a dedicated port of call with an individual lawyer. Our lease extension solicitors have a wealth of experience procuring South West London lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.
South West London Lease Extension Case Summaries:
Sebastian, South West London, London
Last Winter Sebastian, came very close to the eighty-year mark with the lease on his studio flat in South West London. Having purchased his flat two decades ago, the length of the lease was of little importance. Luckily, he noticed he would soon be paying an escalated premium for Extending the lease. Sebastian extended the lease just ahead of time last April. Sebastian and the freeholder subsequently settled on the final figure of £5,500 . If the lease had dropped to less than eighty years, the figure would have become more exhorbitant by at least £950.
South West London case:
Mrs Megan King bought a studio apartment in South West London in July 2004. The question was if we could estimate the price would be for a ninety year extension to my lease. Similar premises in South West London with 100 year plus lease were valued around £300,000. The mid-range ground rent payable was £50 collected quarterly. The lease elapsed in 2102. Given that there were 76 years as a residual term we calculated the compensation to the landlord for the lease extension to be within £8,600 and £9,800 plus legals.
Decision in Waltham Forest
An example of a Freehold Enfranchisement matter before the tribunal for a South West London residence is
78 & 80 Newport Road in January 2013. the Tribunal concluded that the premium to be paid by the leaseholder in respect of the freehold reversion is £23,105
This case was in relation to 2 flats. The unexpired residue of the current lease was 71.63 years.