If you are facing a significant premium because your lease in Southall 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 commence your Southall lease extension today:
Increase your lease and increase your Southall property value
The market value of a leasehold property in Southall is impacted by how many years the lease has remaining. If it is close to or fewer than 80 years you should envisage difficulties on re-sale, so it is recommended to arrange for a lease extension ahead of purchasing. It is preferable to start the process of extending the lease is when a lease still has 82 years unexpired so that formalities can be finalised well before the 80 year mark. Leasehold Reform legislation entitles Southall qualifying lessees to an additional term of ninety years on top of the unexpired term, at a peppercorn rent (zero ground rent). The reason of the valuation is to determine the amount payable by the lessee to the freeholder for the acquisition of the lease extension.
An extended lease has roughly the same value as a freehold
Leasehold residencies in Southall with over 100 years unexpired on the lease are often regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such situations there is often little to be gained by buying the reversionary interest unless savings on ground rent and maintenance charges justify it.
Lenders may decide not to issue a mortgage on a short lease
Whether or not the lease is be regarded as a short lease depends on the specific mortgage company, yet lending institutions start to get jittery at around 75 years. This may cause difficulties as and when you wish to market or refinance your property as it will be practically unmortgageable. Even though you might have no immediate plan to sell but when you do your buyer must hold off for 2 years before being able to exercise the right to a an extension to the lease.
| Lender |
Requirement
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| Bank of Scotland |
Minimum 70 years from the date of the mortgage.
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| Birmingham Midshires |
Minimum 70 years from the date of the mortgage.
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| Halifax |
Minimum 70 years from the date of the mortgage.
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| Skipton Building Society |
85 years from the date of completion of the mortgage
For Buy to Let cases:
- lettings must not breach any of the lessee’s covenants; and
- consent of the lessor to lettings must be obtained if necessary
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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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Get in touch with one of our Southall lease extension solicitors or enfranchisement solicitors
Regardless of whether you are a tenant or a landlord in Southall,the lease extension experts that we work with will always be happy to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Southall valuers.
Southall Lease Extension Case Studies:
Rory, Southall, North London
In recent months Rory, started to get close to the eighty-year threshold with the lease on his one bedroom flat in Southall. Having bought his home 19 years ago, the unexpired term was of minimal concern. by good luck, he noticed he needed to take steps soon on a lease extension. Rory arranged for a lease extension at the eleventh hour last June. Rory and the landlord subsequently agreed on a premium of £5,000 . If he had missed the deadline, the premium would have become more costly by at least £900.
Southall case:
In 2009 we were phoned by Mr and Mrs. F Vincent who, having purchased a studio apartment in Southall in February 1998. The question was if we could shed any light on how much (approximately) compensation to the landlord would be for a 90 year lease extension. Comparable homes in Southall with 100 year plus lease were worth £201,200. The average ground rent payable was £55 invoiced quarterly. The lease ended in 2082. Given that there were 56 years outstanding we estimated the premium to the landlord for the lease extension to be within £31,400 and £36,200 not including expenses.
Decision in Ealing
An example of a Lease Extension matter before the tribunal for a Southall premises is
33 Barbican Road in January 2013. The Tribunals calculation of the lease extension premium payable was £17,592.
This case related to 1 flat. The unexpired term was 55.12 years.