For those whose Barbican flat is held on a long lease, the message is clear – if you ignore the situation, the property will eventually revert to your landlord, leaving you empty-handed. The fewer the years remaining the lower the value of the property and the more expensive it will be to extend the lease.
It is conventional wisdom that a property with in excess of 100 years remaining is worth roughly the equivalent as a freehold. Where an further ninety years added to any lease with more than 35 years remaining, the premises will be equivalent in value to a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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; |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 30 years plus the term of the mortgage at the outset of the mortgage. |
| 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 |
| 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. |
Retaining our service will provide you increased control over the value of your Barbican leasehold, as your property will be more valuable and saleable in relation to the 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.
In 2014 Joseph, came precariously near to the 80-year threshold with the lease on his leasehold apartment in Barbican. In buying his home 18 years ago, the unexpired term was of minimal bearing. Thankfully, he noticed he needed to take action soon on a lease extension. Joseph was able to extend his lease at the eleventh hour in January. Joseph and the landlord in the end settled on the final figure of £5,500 . If he failed to meet the deadline, the price would have gone up by a minimum £975.
In 2011 we were called by Ms Lily Ali who, having owned a first floor apartment in Barbican in February 2000. We are asked if we could shed any light on how much (approximately) price would likely be for a ninety year lease extension. Comparative homes in Barbican with 100 year plus lease were worth £280,000. The average amount of ground rent was £55 invoiced quarterly. The lease expiry date was in 2104. Having 78 years left we approximated the compensation to the landlord to extend the lease to be within £13,300 and £15,400 exclusive of expenses.
An example of a Lease Extension matter before the tribunal for a Barbican residence 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.