It’s an underpublicised truth that a Stratford residential lease is a wasting asset. The lease value drops in proportion to its lease length. The extent of this is taken for granted in the first few years due to the deflation being disguised by increases in the Stratford property prices.Where your lease has approximately 90 years left, 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 under 80 years - otherwise a higher amount will be due. Most flat owners in Stratford will be able to extend under the legislation; however a conveyancer should be able to confirm if you qualify for an extension. In some cases you may not be entitled. There are also strict deadlines and procedures to follow once the process is initiated and you will need to be guided by your lawyer throughout the process.
It is conventional wisdom that a residential leasehold with more than one hundred years unexpired lease term is worth roughly the equivalent as a freehold. Where an further ninety years added to all but the shortest lease, the premises will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| 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. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The lawyers that we work with undertake Stratford 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 lawyer we work with provide it.
In recent months Ibrahim, started to get close to the 80-year mark with the lease on his first floor flat in Stratford. Having purchased his home two decades ago, the unexpired term was of minimal interest. Fortunately, he noticed he would imminently be paying way over the odds for Extending the lease. Ibrahim arranged for a lease extension at the eleventh hour last June. Ibrahim and the freeholder via the management company eventually settled on an amount of £6,000 . If he had missed the deadline, the figure would have become more exhorbitant by at least £925.
Last Summer we were called by Ms G Edwards , who completed a studio apartment in Stratford in June 2006. The dilemma was if we could shed any light on how much (roughly) premium would likely be for a ninety year extension to my lease. Identical homes in Stratford with a long lease were worth £237,600. The mid-range ground rent payable was £45 collected per annum. The lease terminated on 8 March 2093. Taking into account 67 years outstanding we calculated the premium to the landlord to extend the lease to be between £11,400 and £13,200 exclusive of fees.
An example of a Freehold Enfranchisement case for a Stratford residence is 12 Nutfield Road in July 2014. the Tribunal judged that the price to be paid by the applicants for the freehold interest should be £19,572 This case related to 2 flats. The unexpired residue of the current lease was 72.02 years.