Soho leases on residential properties are gradually losing value. Where your lease has about ninety years unexpired, you should start thinking about a lease extension. If lease term falls under eighty years, you will then have to pay half of the property's 'marriage value' in addition to the standard cost of the lease extension to the landlord. Marriage value is the amount of extra value that a lease extension will add to the property. Flat owners in Soho will usually be legally entitled to a lease extension; however It would be wise to check with a conveyancing solicitor to confirm if you qualify. In certain circumstances you may not qualify. There are also strict timetables and formalities to comply with once the process has started so it’s best to be guided by a conveyancer during the process.
It is generally accepted that a property with in excess of 100 years unexpired lease term is worth roughly the same as a freehold. Where an further 90 years added to any lease with more than 35 years remaining, the property will be worth the same as a freehold for decades to come.
| 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. |
| 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; |
| Birmingham Midshires | 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. |
| 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 |
Lease extensions in Soho can be a difficult process. We recommend you procure professional help from a conveyancing solicitor and valuer well versed in the legislation and lease extension process.
We provide you with an expert from a selection of lease extension solicitors, which ensures a targeted and efficient service as you have a dedicated port of call with an individual lawyer. Our lease extension solicitors have in-depth market knowledge procuring Soho lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.
Twenty four months ago Zachary, came precariously near to the eighty-year threshold with the lease on his first floor flat in Soho. In buying his flat two decades ago, the lease term was of little concern. Luckily, he noticed he needed to take steps soon on Extending the lease. Zachary arranged for a lease extension just in the nick of time in September. Zachary and the freeholder via the managing agents eventually agreed on the final figure of £5,500 . If the lease had gone lower than eighty years, the premium would have escalated by a minimum £1,150.
In 2011 we were phoned by Mr and Mrs. V González who, having completed a studio apartment in Soho in September 2001. We are asked if we could estimate the price could be for a 90 year extension to my lease. Similar premises in Soho with a long lease were valued about £225,800. The average amount of ground rent was £60 collected per annum. The lease elapsed on 20 September 2085. Considering the 60 years remaining we approximated the compensation to the freeholder for the lease extension to be within £24,700 and £28,600 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 was in relation to 1 flat. The unexpired term was 73.26 years.