Mayfair leases on residential properties are gradually diminishing in value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of your lease becomes more expensive. It is the case that most Mayfair tenants have the right to extend their lease by an additional 90 years in accordance with the 1993 Leasehold Reform Act. If you are a leasehold owner in Mayfair you really ought to check if your lease has between seventy and 90 years remaining. In particular once the remaining lease term slips under 80 years, the compensation to the landlord for any lease extension increases dramatically as part of the premium you pay is what is known as a marriage value
It is generally accepted that a property with in excess of one hundred years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional 90 years added to any lease with more than 35 years unexpired, the property will be equivalent in value to a freehold for many years ahead.
| 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| 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 lawyers that we work with undertake Mayfair 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 2014 Omar, came critically close to the 80-year threshold with the lease on his studio apartment in Mayfair. In buying his flat 18 years previously, the length of the lease was of little bearing. As luck would have it, he recognised he would imminently be paying way over the odds for a lease extension. Omar was able to extend his lease at the eleventh hour in April. Omar and the landlord ultimately settled on a premium of £5,500 . If the lease had dipped below 80 years, the sum would have gone up by at least £1,050.
Last Summer we were e-mailed by Mr and Mrs. D Turner , who completed a ground floor apartment in Mayfair in February 1995. We are asked if we could estimate the price would be to extend the lease by 90 years. Identical residencies in Mayfair with 100 year plus lease were in the region of £275,000. The average amount of ground rent was £55 invoiced quarterly. The lease ran out in 2101. Given that there were 76 years as a residual term we estimated the compensation to the landlord to extend the lease to be between £9,500 and £11,000 plus fees.
An example of a Lease Extension case for a Mayfair flat is Flat 1 3 Upper Belgrave Street in December 2010. The Tribunal determined that the price payablefor the Lease extension in respect of the subject premises was £2,202,007 This case affected 1 flat. The remaining number of years on the lease was 21 years.