The market value of a leasehold property in Aldersgate depends on how many years the lease has left to run. If it is close to or less than 80 years you should anticipate problems on re-sale, so it is advisable to arrange for a lease extension ahead of buying. Ideally one should start the lease extension process when the lease still has 82 years unexpired so that all matters can be concluded in advance of the 80 year mark. Statute entitles Aldersgate qualifying lessees to an additional term of ninety years in addition to the unexpired term, at a nominal rent (no ground rent). The purpose of the valuation is to determine the sum payable by the lessee to the freeholder for the purchase of the lease extension.
It is conventional wisdom that a property with in excess of one hundred years remaining is worth approximately the equivalent as a freehold. Where an additional ninety years added to all but the shortest lease, the property will be equivalent in value to 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; |
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| 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 handle Aldersgate 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 2014 Harrison, came very near to the 80-year mark with the lease on his purpose- built flat in Aldersgate. Having bought his flat 19 years previously, the unexpired term was of minimal concern. by good luck, he noticed he needed to take action soon on a lease extension. Harrison extended the lease just under the wire in April. Harrison and the landlord subsequently settled on sum of £6,000 . If the lease had fallen to less than 80 years, the sum would have become more costly by at least £875.
In 2009 we were called by Mr and Mrs. F James who, having completed a recently refurbished flat in Aldersgate in August 2007. We are asked if we could estimate the compensation to the landlord would be to extend the lease by ninety years. Similar homes in Aldersgate with an extended lease were in the region of £280,000. The average ground rent payable was £55 billed every twelve months. The lease lapsed in 2102. Given that there were 77 years remaining we approximated the compensation to the freeholder to extend the lease to be within £13,300 and £15,400 not including fees.
An example of a Lease Extension matter before the tribunal for a Aldersgate property is 137 & 139 Haberdasher Street in December 2013. The Tribunal determines in accordance with section 48 and Schedule 13 of the Leasehold Reform, Housing and Urban Development Act 1993 that the premium for the extended lease for each Property should be £12,350.00. This case related to 2 flats. The remaining number of years on the lease was 72.39 years.