It’s a harsh truth that a Southall residential lease is a deteriorating asset. As the lease term diminishes so does the value of the property. The extent of this is not fully appreciated in the early years due to the reduction being disguised by increases in the Southall property prices.Once your lease nears 85ish years, you need to start considering a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease falls lower than 80 years - otherwise a higher premium will be due. Most flat owners in Southall will be able to extend under the legislation; however a lawyer should be able to clarify if you qualify for an extension. In some situations you may not qualify. There are also strict timeframes and procedures to follow once the process is instigated and you will need to be guided by your conveyancer from beginning to end of the process.
It is generally considered that a property with over one hundred years unexpired lease term is worth approximately the same as a freehold. Where an additional ninety years added to all but the shortest lease, 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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 75 years plus the term of the mortgage at the outset of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
Engaging our service will provide you better control over the value of your Southall leasehold, as your property will be more valuable and marketable in respect of lease length should you want to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Gabriel was the the leasehold proprietor of a conversion apartment in Southall being marketed with a lease of a few days over 59 years left. Gabriel on an informal basis spoke with his landlord being a well known Manchester-based freehold company for a lease extension. The landlord was keen to give an extension on non-statutory terms taking the lease to 125 years subject to an increased rent to £200 yearly. No ground rent would be payable on a lease extension were Gabriel to exercise his statutory right. Gabriel obtained expert legal guidance and was able to make an informed decision and deal with the matter and ending up with a market value flat.
In 2014 we were approached by Ms K Flores who, having owned a one bedroom apartment in Southall in October 2007. The dilemma was if we could estimate the compensation to the landlord would likely be to prolong the lease by 90 years. Comparative premises in Southall with 100 year plus lease were worth £260,200. The average ground rent payable was £65 invoiced per annum. The lease lapsed on 1 August 2092. Considering the 66 years unexpired we approximated the premium to the landlord to extend the lease to be between £16,200 and £18,600 plus fees.
An example of a Lease Extension decision for a Southall property is 33 Barbican Road in January 2013. The Tribunals calculation of the lease extension premium payable was £17,592. This case was in relation to 1 flat. The number of years remaining on the existing lease(s) was 55.12 years.