Owning a flat usually means owning a lease of the property, which has a set term of years. The lease will ordinarily be granted for a prescribed period of time , usually 99 or 125 years, although we have witnessed longer and shorter terms in City Of London. Inevitably, the period of lease remaining reduces over time. This may slip by relatively unnoticed when the flat or house needs to be disposed of or refinanced. The shorter the lease the lower the value of the property and the more it will cost to obtain a lease extension. Qualifying leaseholders in City Of London have the right to extend the lease for an additional 90 years under Leasehold Reform legislation. Please give due deliberation before delaying your City Of London lease extension. Holding off that expense now simply increases the price you will ultimately have to pay to extend your lease
Leasehold properties in City Of London with more than one hundred years remaining on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such situations there is often little upside in purchasing the reversionary interest unless savings on ground rent and estate charges merit it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Chelsea 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. |
| 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. |
| 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. |
The conveyancing solicitors that we work with procure City Of London 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.
Half a year ago Aaron, came critically close to the eighty-year threshold with the lease on his basement flat in City Of London. In buying his property two decades ago, the length of the lease was of minimal significance. by good luck, he noticed he needed to take steps soon on Extending the lease. Aaron arranged for a lease extension just in the nick of time last January. Aaron and the freeholder via the managing agents eventually agreed on an amount of £5,000 . If the lease had slipped below eighty years, the figure would have increased by a minimum £1,125.
In 2012 we were contacted by Mr and Mrs. F Taylor who, having completed a garden apartment in City Of London in November 2012. We are asked if we could estimate the premium would be for a 90 year lease extension. Similar flats in City Of London with 100 year plus lease were worth £166,800. The mid-range amount of ground rent was £50 collected per annum. The lease terminated on 16 October 2074. Having 50 years unexpired we approximated the premium to the freeholder to extend the lease to be within £32,300 and £37,400 not including costs.
Mr and Mrs. L Turner was assigned a lease of a one bedroom flat in City Of London in May 2003. We are asked if we could estimate the price would be for a ninety year extension to my lease. Comparable homes in City Of London with a long lease were valued around £280,000. The mid-range amount of ground rent was £45 billed per annum. The lease expiry date was in 2094. Considering the 70 years as a residual term we estimated the premium to the freeholder to extend the lease to be between £12,400 and £14,200 not including fees.