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Why you should start your Tufnell Park lease extension


Why you should start your Tufnell Park lease extension today:

A Tufnell Park lease depreciates with the years remaining on the lease.

With a domestic leasehold premises in Tufnell Park, you are actually buying a right to live in a property for a prescribed time frame. Modern flat leases are usually granted for 99 years or 125. Even though this may appear like a long period of time, you may consider a lease extension sooner as opposed to later. Accepted thinking is that the shorter the number of years is the cost of extending the lease increases markedly notably when there are fewer than 80 years left. Residents in Tufnell Park with a lease drawing near to 81 years remaining should seriously consider extending it without delay. When the lease term has below 80 years remaining, under the current Act the landlord is entitled to calculate and levy a greater premium, based on a technical calculation, known as “marriage value” which is due.

An extended lease is almost the same value as a freehold

It is generally considered that a residential leasehold with over 100 years unexpired lease term is worth roughly the equivalent as a freehold. Where an additional ninety years added to all but the shortest lease, the property will be equivalent in value to a freehold for decades to come.

Banks and Building Societies may decide not to issue a mortgage on a short lease

Banks and Building Societies have specific criteria when loaning funds charged on leasehold property. Many will simply refuse lend at all once an unexpired lease term falls below a certain unexpired lease term. Many Lending institutions will not consider property with a remaining term of less than 75 years suitable security. In addition to this being important when selling, it is also relevant where you are seeking to refinance your Tufnell Park home.

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.
National Westminster Bank Mortgage term plus 30 years.
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.
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 you become aware that it does not meet these requirements, please refer to the Issuing Office

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.
Virgin 85 years at the time of completion. If it's less, we require it to be extended on or before completion.

What makes us experts in Tufnell Park lease extensions?

Using our service gives you enhanced control over the value of your Tufnell Park leasehold, as your property will be more valuable and marketable in relation to the lease length should you decide to sell. The conveyancing solicitors that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.

Tufnell Park Lease Extension Case Studies:

Jackson, Tufnell Park, North London,

Jackson was the the leasehold owner of a high value flat in Tufnell Park on the market with a lease of a little over sixty years unexpired. Jackson informally spoke with his freeholder being a well known Bristol-based freehold company for a lease extension. The freeholder indicated a willingness to extend the lease to 125 years on the basis of a rise in the rent to £125 per annum. No ground rent would be due on a lease extension were Jackson to exercise his statutory right. Jackson procured expert advice and was able to make an informed judgement and handle with the matter and readily saleable.

Tufnell Park case:

Last Winter we were called by Mr and Mrs. T Jackson , who moved into a newly refurbished apartment in Tufnell Park in October 1995. The question was if we could shed any light on how much (roughly) compensation to the landlord would be for a ninety year lease extension. Comparative homes in Tufnell Park with 100 year plus lease were in the region of £173,800. The average amount of ground rent was £60 collected quarterly. The lease terminated on 9 June 2080. Taking into account 55 years left we estimated the compensation to the landlord for the lease extension to be within £31,400 and £36,200 plus legals.

Decision in Camden

An example of a Lease Extension matter before the tribunal for a Tufnell Park flat is Flat 2 27 Mackeson Road in December 2012. The Tribunal assessed the value of the lease extension premium at £35,435 and rounded the figure to £35,500 This case was in relation to 1 flat. The unexpired term as at the valuation date was 64.77 years.