When it comes to residential leasehold premises in Chinatown, you are in fact renting it for a certain period of time. Modern 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 should consider extending the lease sooner as opposed to later. Accepted thinking is that the shorter the number of years is the cost of extending the lease gets disproportionately greater particularly when there are fewer than eighty years remaining. Residents in Chinatown with a lease drawing near to 81 years unexpired should seriously think of extending it as soon as possible. When a lease has below eighty years remaining, under the relevant legislation the landlord can calculate and charge a greater amount, based on a technical computation, strangely termed as “marriage value” which is due.
It is conventional wisdom that a property with more than 100 years unexpired lease term is worth approximately the same as a freehold. Where an additional ninety years added to any lease with more than 45 years remaining, the residence will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. Leases with fewer than 70 years should only be referred to the issuing office where the following scenario applies, as discretion may be applied subject to bank approval: • Property is located in any of the following prestigious developments: Cadogan, Crown, Grosvenor, Howard de Walden, Portman or Wellcome Trust Estates in Central London AND • The value of the property subject to the short remaining term is £500,000 or more AND • The loan to value does not exceed 90% for purchases, 90% like for like re-mortgages, 80% for re-mortgages with any element of capital raising and 80% for existing Barclays mortgage borrowers applying for additional borrowing; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
| Yorkshire Building Society | 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. |
Irrespective of whether you are a tenant or a landlord in Chinatown,the lease extension experts that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Chinatown valuers.
Subsequent to protracted correspondence with the landlord of her garden flat in Chinatown, Sarah initiated the lease extension process as the eighty year threshold was rapidly coming. The legal work was finalised in June 2006. The freeholder’s charges were kept to an absolute minimum.
Last month we were contacted by Dr Toby Hernández , who acquired a basement flat in Chinatown in June 1998. The question was if we could estimate the price could be to extend the lease by a further 90 years. Comparable properties in Chinatown with a long lease were worth £206,200. The average amount of ground rent was £55 billed monthly. The lease ran out on 26 August 2082. Given that there were 56 years outstanding we estimated the compensation to the landlord for the lease extension to be within £31,400 and £36,200 plus fees.
An example of a Freehold Enfranchisement matter before the tribunal for a Chinatown property 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 lease term was 73.92 years.