With a residential leasehold property in Chinatown, you are in fact renting it for a certain period of time. These days flat leases are usually granted for 99 years or 125. Many leasehold owners are unconcerned as this seems like a long period of time, you may think about extending the lease sooner rather than later. The general rule is that the shorter the lease is the cost of extending the lease gets disproportionately greater particularly when there are less than 80 years left. Anyone in Chinatown with a lease drawing near to 81 years remaining should seriously think of extending it sooner as opposed to later. When the lease term has less than 80 years remaining, under the current Act the landlord can calculate and levy a larger amount, assessed on a technical computation, known as “marriage value” which is payable.
It is generally accepted that a residential leasehold with more than one hundred years unexpired lease term is worth approximately the equivalent as a freehold. Where an further 90 years added to all but the shortest lease, the premises will be equivalent in value to a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Godiva Mortgages | 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. |
| 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. |
| 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 |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
Using our service will provide you better control over the value of your Chinatown leasehold, as your property will be more valuable and marketable in relation to the lease length should you decide to sell. The lawyers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Austin owned a conversion apartment in Chinatown on the market with a lease of fraction over 59 years unexpired. Austin informally spoke with his landlord being a well known Manchester-based freehold company and enquired on a premium to extend the lease. The freeholder indicated a willingness to grant an extension taking the lease to 125 years subject to a rise in the rent to £200 yearly. Ordinarily, ground rent would not be due on a lease extension were Austin to exercise his statutory right. Austin procured expert advice and secured an acceptable deal informally and readily saleable.
Dr R Alexander completed a one bedroom apartment in Chinatown in March 2005. The dilemma was if we could shed any light on how much (roughly) premium could be to extend the lease by 90 years. Similar properties in Chinatown with 100 year plus lease were in the region of £198,800. The mid-range ground rent payable was £55 billed annually. The lease ran out in 2081. Given that there were 55 years unexpired we estimated the compensation to the freeholder for the lease extension to be between £33,300 and £38,400 plus professional charges.
An example of a Freehold Enfranchisement decision for a Chinatown residence is 36 New Wanstead in August 2010. The Tribunal arrived at a valuation of the premium for the freehold of £22,359. This case related to 2 flats. The unexpired term as at the valuation date was 73.92 years.