Unfortunately that a Barbican residential lease is a deteriorating asset. The lease value reduces in proportion to its lease length. The extent of this is not fully appreciated in the early years due to the reduction being disguised by increases in the Barbican property market.Once your lease gets to 85ish years, you need to start thinking about a lease extension. If lease term falls below eighty years, you will then be required to pay 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. The marriage fee is the amount of extra value that a lease extension will add the property The majority of flat owners in Barbican will be able to extend under the legislation; however a conveyancing solicitor should be able to confirm if you qualify for an extension. In some situations you may not be entitled. There are also strict timeframes and procedures to follow once the process is initiated and you will need to be guided by your conveyancer for the duration of the process.
Leasehold premises in Barbican with over 100 years remaining on the lease are often referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your home. In such situations there is often little to be gained by purchasing the reversionary interest unless savings on ground rent and service charges warrant it.
| Lender | Requirement |
|---|---|
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 75 years plus the term of the mortgage at the outset of the mortgage. |
| Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
| 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 procure Barbican 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 Jackson, came precariously close to the eighty-year mark with the lease on his garden apartment in Barbican. In buying his flat 18 years ago, the lease term was of no relevance. Thankfully, he recognised he would imminently be paying an escalated premium for a lease extension. Jackson extended the lease just ahead of time last June. Jackson and the freeholder eventually agreed on sum of £6,000 . If he failed to meet the deadline, the price would have increased by a minimum £1,075.
In 2010 we were approached by Mr and Mrs. J Brown who, having moved into a garden flat in Barbican in October 2007. The dilemma was if we could shed any light on how much (approximately) premium could be for a 90 year lease extension. Identical premises in Barbican with 100 year plus lease were in the region of £242,600. The mid-range amount of ground rent was £45 invoiced annually. The lease concluded on 19 October 2093. Given that there were 67 years left we approximated the compensation to the freeholder to extend the lease to be within £11,400 and £13,200 not including costs.
An example of a Lease Extension matter before the tribunal for a Barbican 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 unexpired residue of the current lease was 72.39 years.