With a long leasehold premises in Paddington, you are actually buying an entitlement to live in a property for a prescribed time frame. These days flat leases are usually granted for 99 years or 125. Even though this may appear like a lengthy period of time, you should think about extending the lease sooner rather than later. The general rule is that the shorter the number of years is the cost of extending the lease gets disproportionately more expensive especially when there are fewer than 80 years left. Leasehold owners in Paddington with a lease approaching 81 years unexpired should seriously consider extending it sooner rather than later. Once the lease term has fewer than eighty years outstanding, under the current Act the landlord can calculate and charge a greater premium, assessed on a technical multiplication, known as “marriage value” which is payable.
It is generally accepted that a residential leasehold with over one hundred years remaining is worth roughly the equivalent as a freehold. Where an further 90 years added to any lease with more than 35 years left, the property will be worth the same as a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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; |
| 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. |
| 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 conveyancing solicitors that we work with undertake Paddington 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 recent months Alex, started to get near to the eighty-year mark with the lease on his garden apartment in Paddington. In buying his home twenty years ago, the length of the lease was of little bearing. by good luck, it dawned on him that he would imminently be paying an inflated amount for Extending the lease. Alex arranged for a lease extension just in the nick of time in September. Alex and the freeholder via the managing agents in the end settled on an amount of £5,000 . If he failed to meet the deadline, the figure would have escalated by a minimum £1,125.
Last Christmas we were contacted by Ms N Torres , who completed a first floor flat in Paddington in June 2005. We are asked if we could approximate the premium would likely be for a 90 year extension to my lease. Comparative properties in Paddington with a long lease were in the region of £264,000. The average amount of ground rent was £60 billed annually. The lease end date was on 16 March 2077. Taking into account 53 years outstanding we calculated the premium to the landlord for the lease extension to be between £37,100 and £42,800 not including costs.
An example of a Lease Extension matter before the tribunal for a Paddington residence is Flats 37 & 39 88/90 Portland Place in December 2010. The Tribunal determined that the premium payable for the lease extensions in respect of these two flats is as follows:- For Flat 37, the sum of £385,230.00 For Flat 39, the sum of £436,780.00 This case was in relation to 2 flats. The remaining number of years on the lease was 24.02 years.