For those whose Barbican property is held on a long lease, the message is clear – if you do nothing, the property will eventually revert to the freeholder, leaving you empty-handed. The shorter the lease the less it is worth and the more it will cost to extend the lease.
Leasehold properties in Barbican with over one hundred years left on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such situations there is often little upside in buying the reversionary interest unless savings on ground rent and service charges merit it.
| Lender | Requirement |
|---|---|
| Coventry Building Society | 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. |
| National Westminster Bank | Mortgage term plus 30 years. |
| 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
Engaging our service will provide you enhanced control over the value of your Barbican leasehold, as your property will be more valuable and marketable in relation to the lease length should you decide to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
16 months ago Samuel, came dangerously near to the eighty-year mark with the lease on his garden flat in Barbican. In buying his property twenty years previously, the lease term was of little importance. Thankfully, it dawned on him that he needed to take steps soon on Extending the lease. Samuel arranged for a lease extension just in the nick of time in July. Samuel and the landlord who owned the flat above subsequently agreed on a premium of £6,000 . If he failed to meet the deadline, the figure would have escalated by a minimum £1,150.
Dr Dylan López owned a purpose-built flat in Barbican in July 2010. We are asked if we could estimate the price would likely be for a ninety year lease extension. Identical premises in Barbican with an extended lease were valued about £208,200. The mid-range amount of ground rent was £65 invoiced annually. The lease finished on 23 March 2086. Given that there were 61 years left we calculated the compensation to the freeholder to extend the lease to be between £19,000 and £22,000 not including fees.
An example of a Lease Extension matter before the tribunal for a Barbican flat 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.