Belgravia residential property held on a long lease is a wasting asset because a leaseholder merely owns the property for a period of years.
It is conventional wisdom that a property with over one hundred years remaining is worth approximately the same as a freehold. Where an additional 90 years added to any lease with more than 45 years left, the premises will be equivalent in value to a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Lloyds TSB Scotland | Minimum 70 years from the date 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. |
The conveyancers that we work with handle Belgravia 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.
Half a year ago Omar, started to get near to the 80-year mark with the lease on his ground floor flat in Belgravia. In buying his flat two decades ago, the lease term was of little interest. As luck would have it, he noticed he needed to take steps soon on a lease extension. Omar was able to extend his lease at the eleventh hour in March. Omar and the landlord subsequently agreed on an amount of £6,000 . If the lease had descended to less than eighty years, the premium would have increased by at least £1,000.
Last Summer we were phoned by Mr K Kelly , who bought a garden apartment in Belgravia in November 2001. We are asked if we could shed any light on how much (roughly) premium would likely be to prolong the lease by ninety years. Comparable premises in Belgravia with 100 year plus lease were valued around £255,000. The average ground rent payable was £50 invoiced per annum. The lease finished in 2095. Having 71 years outstanding we approximated the compensation to the landlord for the lease extension to be within £9,500 and £11,000 plus professional charges.
An example of a Lease Extension case for a Belgravia premises is Flat 3 47 Cadogan Square in December 2010. the Tribunal determined that the premium payable to the landord by the leaseholder for the lease extension was £732,935 This case related to 1 flat. The unexpired residue of the current lease was 13.33 years.