Owning a flat usually means owning a lease of the property, this is a ‘time-limited’ interest becoming shorter every day. This lease will usually be granted for a set period of time , usually 99 or 125 years, although we have seen longer and shorter terms in Highbury. Inevitably, the period of lease left reduces as time goes by. This may pass by relatively unnoticed when the residence has to be sold or refinanced. The fewer the years remaining the lower the value of the property and the more it will cost to extend the lease. Eligible leaseholders in Highbury have the right to extend the lease for an additional ninety years under statute. Please give careful attention before putting off your Highbury lease extension. Holding off that expense now likely increases the price you will ultimately incur to extend your lease
It is generally accepted that a residential leasehold with over 100 years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional 90 years added to all but the shortest lease, the residence will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| Coventry Building Society | 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. |
The conveyancers that we work with undertake Highbury 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.
Off the back of protracted correspondence with the landlord of her garden apartment in Highbury, Hollie started the lease extension process as the 80 year threshold was swiftly approaching. The transaction was finalised in September 2012. The landlord’s costs were negotiated to approximately 550 GBP.
Last month we were contacted by Mr Hunter Nelson , who bought a studio flat in Highbury in March 1998. We are asked if we could approximate the premium could be to prolong the lease by an additional years. Similar residencies in Highbury with an extended lease were valued around £256,600. The average ground rent payable was £60 collected monthly. The lease concluded in 2077. Taking into account 52 years unexpired we calculated the compensation to the freeholder to extend the lease to be between £39,000 and £45,000 not including expenses.
An example of a Lease Extension decision for a Highbury residence is Lower Flat 16A Beatty Road in September 2012. The premium payable was £13,577. The terms of the lease has been agreed between the Applicants and the First Respondent and the Tribunal did not seek to disturb that agreement. This case related to 1 flat.