North West London 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 the lease gets more expensive. It is the case that most North West London tenants have the right to extend their lease by an additional 90 years by virtue of the 1993 Leasehold Reform Act. If you are a leasehold owner in North West London you really ought to check if your lease has between 70 and 90 years left. In particular once the remaining lease term slips under 80 years, the cost of any lease extension increases dramatically as an element of the premium you pay is what is known as a marriage value
It is conventional wisdom that a residential leasehold with in excess of one hundred years remaining is worth approximately the same as a freehold. Where an further 90 years added to all but the shortest lease, the premises will be worth the same as a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Godiva Mortgages | 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. |
| Lloyds TSB Scotland | 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. |
| 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 |
| 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 conveyancers that we work with undertake North West 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 conveyancing solicitor we work with provide it.
In recent months Harvey, started to get close to the eighty-year threshold with the lease on his ground floor apartment in North West London. Having purchased his home 18 years ago, the length of the lease was of minimal bearing. Fortunately, it dawned on him that he would soon be paying way over the odds for a lease extension. Harvey extended the lease just ahead of time in January. Harvey and the freeholder via the managing agents ultimately agreed on a premium of £5,000 . If the lease had dipped below eighty years, the sum would have gone up by at least £875.
Last May we were e-mailed by Dr H Green , who acquired a studio flat in North West London in May 2012. We are asked if we could approximate the price would be to prolong the lease by a further 90 years. Comparative homes in North West London with an extended lease were worth £245,000. The average ground rent payable was £50 invoiced monthly. The lease lapsed in 2093. Considering the 68 years unexpired we calculated the compensation to the freeholder for the lease extension to be within £9,500 and £11,000 exclusive of expenses.
Mr and Mrs. I Alexander purchased a first floor apartment in North West London in June 2007. The dilemma was if we could approximate the compensation to the landlord would be for a 90 year extension to my lease. Identical properties in North West London with 100 year plus lease were in the region of £285,000. The mid-range ground rent payable was £55 invoiced every twelve months. The lease finished on 25 September 2104. Having 79 years left we estimated the compensation to the freeholder to extend the lease to be within £13,300 and £15,400 not including legals.