Chinatown leases on residential properties are gradually losing value. if your lease has about 90 years remaining, you should start thinking about a lease extension. Eighty years is a significant number: when the remaining term of a lease falls below this level then you begin incurring an additional element called marriage value. Flat owners in Chinatown will mostly be legally entitled to a lease extension; however it’s a good idea to check with a lawyer to check your eligibility. In certain situations you may not be entitled. There are prescribed deadlines and steps to follow once the process is initiated so it’s best to be guided by a lawyer during the process.
Leasehold residencies in Chinatown with in excess of 100 years remaining on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such circumstances there is often little upside in buying the freehold unless savings on ground rent and service charges merit it.
| 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. |
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Lease extensions in Chinatown can be a difficult process. We recommend you get guidance from a conveyancing solicitor and surveyor with experience in this area.
We provide you with an expert from a selection of lease extension solicitors, which ensures a targeted and efficient service as you have a dedicated port of call with an individual lawyer. Our lease extension solicitors have a wealth of experience dealing with Chinatown lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.
Last year Leo, came perilously near to the 80-year mark with the lease on his studio flat in Chinatown. In buying his property 18 years ago, the length of the lease was of little significance. Fortunately, he realised he would imminently be paying way over the odds for a lease extension. Leo arranged for a lease extension at the eleventh hour in June. Leo and the freeholder ultimately settled on the final figure of £6,000 . If the lease had gone lower than 80 years, the figure would have gone up by at least £850.
Last Summer we were approach by Mr and Mrs. T Kelly , who bought a garden flat in Chinatown in January 1998. We are asked if we could shed any light on how much (approximately) premium would likely be to extend the lease by a further 90 years. Comparable properties in Chinatown with an extended lease were valued about £295,000. The mid-range ground rent payable was £50 collected monthly. The lease terminated in 2100. Having 75 years remaining we estimated the compensation to the landlord to extend the lease to be within £8,600 and £9,800 plus costs.
An example of a Freehold Enfranchisement matter before the tribunal for a Chinatown premises is 36 New Wanstead in August 2010. The Tribunal arrived at a valuation of the premium for the freehold of £22,359. This case was in relation to 2 flats. The number of years remaining on the existing lease(s) was 73.92 years.