Unfortunately that a Chinatown residential lease is a deteriorating asset. As the lease term reduces so does the value of the property. The extent of this is not fully appreciated in the first few years due to the reduction being disguised by increases in the Chinatown 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 slips below eighty years - otherwise a higher amount will be due. The majority of leasehold owners in Chinatown will be able to extend under the legislation; however a conveyancing solicitor will be able to confirm if you qualify for an extension. In some cases you may not qualify. There are also strict timetables and procedures to follow once the process is instigated and you will need to be guided by your conveyancer throughout the process.
Leasehold residencies in Chinatown with more than one hundred years left on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your property. In such situations there is often little upside in buying the reversionary interest unless savings on ground rent and service charges merit it.
| Lender | Requirement |
|---|---|
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The conveyancers that we work with undertake Chinatown 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 Alfie, came seriously near to the 80-year threshold with the lease on his ground floor flat in Chinatown. In buying his home 19 years ago, the length of the lease was of no importance. Thankfully, it dawned on him that he needed to take action soon on Extending the lease. Alfie arranged for a lease extension at the eleventh hour in July. Alfie and the landlord who owned the flat above ultimately agreed on the final figure of £5,500 . If he had missed the deadline, the amount would have become more costly by a minimum £950.
Dr S Smith owned a purpose-built flat in Chinatown in August 2002. The question was if we could shed any light on how much (approximately) price could be for a 90 year lease extension. Comparable flats in Chinatown with 100 year plus lease were in the region of £275,000. The mid-range amount of ground rent was £45 collected every twelve months. The lease came to a finish in 2094. Taking into account 69 years unexpired we approximated the compensation to the landlord for the lease extension to be within £12,400 and £14,200 exclusive of fees.
An example of a Freehold Enfranchisement case for a Chinatown premises is 36 New Wanstead in August 2010. The Tribunal arrived at a valuation of the premium for the freehold of £22,359. This case was in relation to 2 flats. The unexpired term as at the valuation date was 73.92 years.