I am about to put a bid on a leasehold apartment in Oval. The estate agents assure me that it is usual for flats in Oval to have less than 75 years left on the lease. I am taking out a loan with The Mortgage Works. Will the property be mortgageable given that the lease has 72 years remaining.
Most leasehold conveyancing experts should be able to deal with a lease extension. if you are securing a mortgage then your lender may insist that the lease be extended before competition. The Mortgage Works have specific requirements as set out in the UK Finance Lenders’ Handbook in relation to minimum unexpired lease terms. As of 18/7/2019 the requirements read as follows :
Ground Rents and event fees must be reasonable at all times during the term of the lease. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us for Valuer consideration. See the guidance below.
SECOND HAND PROPERTIES
Unacceptable - advise Originations (Will be declined):
- Unexpired lease term <70 years
- Ground Rent >0.5% of the property value
- Ground Rent doubles <every 20 years (e.g. doubles every 5, 10 or 15 years)
- Ground Rent is compounded RPI
- Ground Rent review period ≤5 years
Refer to Originations (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 to 85 years
- Ground Rent >0.1% and ≤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 >5 and <10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges >£500 p/a (please provide details of what the charges cover)
- Service Charges >0.5% 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 Originations):
- Unexpired lease term >85 years
- Ground Rent ≤0.1% of the property value
- Ground Rent review period ≥10 years
- Ground Rent escalation ≤RPI
NEW BUILD PROPERTIES (includes office conversions)
Unacceptable - advise Originations (Will be declined):
- Unexpired lease term <125 years on a new build flat or <250 years on a new build house
- Starting Ground Rent >0.1% of the property value
- Ground Rent review period ≤ 5 years
- Ground Rent doubles < every 20 years (e.g. doubles every 5, 10 or 15 years)
- Ground Rent is compounded RPI
Refer to Originations (Valuer will consider any impact on valuation figure and marketability):
- Ground Rent is linked to any indices greater than RPI
- Ground Rent is linked to the value of the building*
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges >£500 p/a (please provide details of what the charges cover)
- Service Charges >0.5% 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 Originations):
- Unexpired lease term ≥125 years on a new build flat or ≥250 years on a new build house
- Starting Ground Rent ≤0.1% of the property value
- Ground Rent review period >5 years
- Ground Rent escalation ≤RPI
* 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
I own a 4 bedroom Victorian house in Oval. Conveyancing practitioner represented me and Barnsley Building Society. I happened to do a free search for it on the Land Registry database and I saw a couple of entries: the first freehold, the second leasehold under the exact same property. I thought I was buying a freehold how can I check?
You should assess the Freehold register you have again and check the Charges Register for mention of a lease. The best way to be sure that you are also the registered proprietor of the leasehold and freehold title as well is to check (£3). It is not completely unheard of in Oval and other locations in the country and poses no real issues for owners other than when they sell they have to account for both freehold and leasehold interests when dealing with lenders. You can also question the situation with your conveyancing lawyer who completed the work.
I am purchasing my first flat in Oval with a loan from Chelsea Building Society. The builders would not reduce the price so I negotiated 6k of fixtures and fittings instead. The house builders rep advised me not to tell my solicitor about the side-deal as it will adversely affect my mortgage with the lender. Should I keep quiet?.
All lenders require a Disclosure of Incentives Form from the developer of any new build, converted or renovated property, It is available online from the Lenders’ Handbook page on the CML website. CML form is completed and handed to the lender's surveyor when the inspection is done.
Lenders have different policies on incentives. Some accept none at all, cash or physical, while others will accept cash incentives up to 5%.
Hard to understand why the representative of a builder would be suggesting you withold information from a solicitor when all this will be clearly visible on forms the builder has to supply to its solicitor, the buyer's solicitor and the surveyor.
I opted to have a survey completed on a house in Oval in advance of retaining conveyancers. I have been told that there is a flying freehold aspect to the house. My surveyor advised that some mortgage companies will refuse to issue a loan on such a property.
It varies from the lender to lender. Lloyds has different instructions for example to Birmingham Midshires. If you e-mail us we can investigate further with the relevant bank. If you lender is happy to lend one our lawyers can help as they are accustomed to dealing with flying freeholds in Oval. Conveyancing can be more complicated and therefore you should check with your conveyancing solicitor in Oval to see if the conveyancing costs will increase in light of this.
We're first time buyers - had an offer accepted, yet the estate agent has warned us that the owners will only move forward if we use their chosen lawyers as they need an ‘expedited deal’. We would rather use a high street conveyancer with experience of conveyancing in Oval
It is highly unlikely the vendors are driving this. Should the owner require ‘a quick sale', turning down a genuine purchaser is counter productive. Bypass the agents and go straight to the sellers and make sure they understand (a)you are serious buyers (b)you are excited to move forward, with mortgage lined up © you are unencumbered (d) you intend to proceed fast (e)but you are going to use your preferred Oval conveyancing lawyers - not the ones that will give their estate agent a introducer fee or meet his conveyancing targets set by HQ.
I am hoping to put an offer on a small detached house that appears to be perfect, at a reasonable price which is making it all the more appealing. I have subsequently been informed that the title is leasehold rather than freehold. I would have thought that there are particular concerns buying a leasehold house in Oval. Conveyancing advisers have not yet been instructed. Will my lawyers set out the implications of buying a leasehold house in Oval ?
The majority of houses in Oval are freehold rather than leasehold. In this scenario it’s worth having a local conveyancer who is familiar with the area who can help the conveyancing process. It is clear that you are buying in Oval in which case you should be shopping around for a Oval conveyancing solicitor and check that they have experience in transacting on leasehold houses. First you will need to check the number of years remaining. As a lessee you will not be at liberty to do whatever you want to the property. The lease comes with conditions for example requiring the landlord’spermission to carry out changes to the property. You may also be required to pay a service charge towards the maintenance of the communal areas where the property is located on an estate. Your solicitor should appraise you on the various issues.
I am the proprietor of a first floor flat in Oval. Given that I can not reach agreement with the freeholder, can the Leasehold valuation Tribunal make a decision on the premium due for the purchase of the freehold?
Most definitely. We are happy to put you in touch with a Oval conveyancing firm who can help.
An example of a Lease Extension case for a Oval property is Ground Floor Flat 39 Bronsart Road in May 2010. Following a vesting order by West London County Court the Leasehold Valuation Tribunal concluded that the price to be paid for the extended lease of the premises was Thirteen Thousand Two hundred pounds (£13,200) in accordance with the valuation. The extended lease was granted for a term of 90 years from the expiry date of the Lease and at a peppercorn ground rent from the date of the vesting order. This case affected 1 flat. The unexpired term was 74.77 years.
