Unfortunately that a Soho residential lease is a deteriorating asset. The lease value drops in proportion to its lease length. The extent of this is taken for granted in the early years due to the deflation being disguised by increases in the Soho property market.Where your lease has approximately 90 years left, you should start considering a lease extension. If lease term slips under eighty years, you will end up paying 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of additional value that a lease extension will add the property The majority of leasehold owners in Soho will be able to extend under the legislation; however a conveyancer should be able to clarify if you qualify for an extension. In some cases you may not qualify. There are also strict timeframes and procedures to follow once the process is instigated and you will need to be guided by your conveyancer for the duration of the process.
Leasehold premises in Soho with over one hundred years unexpired on the lease are often 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 reversionary interest unless savings on ground rent and estate charges warrant it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Chelsea 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. |
| Leeds Building Society | 85 years remaining from the start 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. |
Engaging our service gives you better control over the value of your Soho leasehold, as your property will be more valuable and marketable in terms 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.
Last year Jack, came very near to the 80-year threshold with the lease on his purpose- built apartment in Soho. Having bought his property two decades ago, the unexpired term was of minimal bearing. Luckily, it dawned on him that he needed to take steps soon on a lease extension. Jack was able to extend his lease at the eleventh hour in August. Jack and the landlord ultimately agreed on the final figure of £5,000 . If he failed to meet the deadline, the price would have increased by at least £975.
Last April we were called by Mr and Mrs. L François , who acquired a garden apartment in Soho in May 2003. The question was if we could shed any light on how much (roughly) price would be for a 90 year lease extension. Comparative homes in Soho with an extended lease were worth £223,400. The mid-range amount of ground rent was £60 billed per annum. The lease concluded in 2084. Having 59 years remaining we approximated the compensation to the landlord for the lease extension to be within £27,600 and £31,800 not including professional charges.
An example of a Freehold Enfranchisement decision for a Soho flat is 20 Avonwick Road in July 2013. The Tribunal was dealing with an application under Section 26 of the Leasehold Reform Housing and Urban Development Act 1993 for a determination of the freehold value of the property. It was concluded that the price to be paid was Fifteen Thousand Nine Hundred and Seventy (£15,970) divided as to £8,200 for Flat 20 and £7,770 for Flat 20A This case related to 1 flat. The remaining number of years on the lease was 73.26 years.