Soho leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of your lease gets more expensive. Legislation has been in place for sometime now allowing qualifying Soho residential leaseholders to extend the terms of long leases. If you are a leasehold owner in Soho you would be well advised to see if your lease has between 70 and ninety years left. In particular once the remaining lease term slips under 80 years, the cost of any lease extension increases dramatically as part of the premium you pay is what is known as a marriage value
It is generally accepted that a residential leasehold with over one hundred years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional ninety years added to any lease with more than 35 years left, the premises will be worth the same as a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The conveyancers that we work with procure Soho 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 conveyancer we work with provide it.
In recent months Nathan, came precariously near to the eighty-year threshold with the lease on his ground floor flat in Soho. In buying his flat two decades ago, the unexpired term was of no bearing. by good luck, it dawned on him that he needed to take steps soon on Extending the lease. Nathan arranged for a lease extension just in the nick of time last May. Nathan and the freeholder via the management company eventually agreed on the final figure of £6,000 . If he not met the deadline, the amount would have increased by a minimum £1,150.
Mr and Mrs. D Stewart owned a purpose-built apartment in Soho in March 2007. We are asked if we could approximate the premium could be to prolong the lease by an additional years. Identical flats in Soho with a long lease were valued about £267,600. The mid-range ground rent payable was £65 invoiced per annum. The lease finished in 2091. Having 67 years as a residual term we approximated the premium to the freeholder for the lease extension to be between £14,300 and £16,400 exclusive of legals.
An example of a Freehold Enfranchisement matter before the tribunal for a Soho residence 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 affected 1 flat. The remaining number of years on the lease was 73.26 years.