Mayfair residential property held on a long lease is a depreciating asset as the leaseholder merely owns the property for a period of years.
Leasehold residencies in Mayfair with in excess of 100 years unexpired on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such circumstances there is often little to be gained by purchasing the freehold unless savings on ground rent and service charges merit it.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage should be declined (see exception below). Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office. 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; |
| Halifax | Minimum 70 years from the date of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Engaging our service will provide you better control over the value of your Mayfair leasehold, as your property will be more valuable and saleable in respect of lease length should you decide to sell. The conveyancers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Two years ago Kai, came precariously near to the 80-year threshold with the lease on his ground floor flat in Mayfair. In buying his home two decades ago, the unexpired term was of minimal interest. Thankfully, he became aware that he would soon be paying an inflated amount for Extending the lease. Kai extended the lease just under the wire last March. Kai and the freeholder via the managing agents in the end agreed on a premium of £5,500 . If the lease had slid below 80 years, the sum would have escalated by a minimum £1,000.
Last year we were contacted by Dr Jade Gray , who purchased a ground floor flat in Mayfair in November 2011. The dilemma was if we could approximate the compensation to the landlord would likely be to extend the lease by an additional years. Similar residencies in Mayfair with a long lease were worth £280,000. The average ground rent payable was £55 billed per annum. The lease ran out on 16 April 2102. Having 77 years outstanding we estimated the premium to the landlord for the lease extension to be between £13,300 and £15,400 not including legals.
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 related to 1 flat. The unexpired term was 21 years.