With a long leasehold property in Chinatown, you are actually purchasing a right to reside in a property for a set period of time. In recent years flat leases typically tend to be for 99 years or 125. Even though this may appear like a long period of time, you may consider extending the lease sooner rather than later. Accepted thinking is that the shorter the lease is the cost of extending the lease becomes disproportionately greater notably when there are less than 80 years remaining. Anyone in Chinatown with a lease approaching 81 years left should seriously consider extending it as soon as possible. Once a lease has below eighty years remaining, under the current statute the landlord is entitled to calculate and charge a larger amount, assessed on a technical computation, strangely termed as “marriage value” which is payable.
Leasehold premises in Chinatown with more than 100 years left 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 upside in purchasing the freehold unless savings on ground rent and estate charges warrant 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. |
| 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 |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
Engaging our service will provide you increased control over the value of your Chinatown leasehold, as your property will be more valuable and saleable in respect of lease length should you wish to sell. The lawyers that we work with have a in-depth market knowledge handling many hundreds of lease extensions or freehold purchase transactions.
14 months ago Michael, came perilously close to the 80-year threshold with the lease on his garden flat in Chinatown. In buying his flat 19 years previously, the unexpired term was of no interest. Fortunately, he became aware that he needed to take steps soon on a lease extension. Michael arranged for a lease extension at the eleventh hour last September. Michael and the freeholder via the managing agents subsequently settled on an amount of £6,000 . If the lease had fallen to less than 80 years, the sum would have gone up by at least £850.
Mr and Mrs. F Lee completed a studio flat in Chinatown in June 2003. We are asked if we could shed any light on how much (approximately) compensation to the landlord would likely be to prolong the lease by an additional years. Comparable premises in Chinatown with a long lease were in the region of £270,000. The average amount of ground rent was £65 collected monthly. The lease terminated in 2092. Given that there were 68 years remaining we calculated the premium to the landlord to extend the lease to be between £12,400 and £14,200 not including professional charges.
An example of a Freehold Enfranchisement case for a Chinatown flat 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 remaining number of years on the lease was 73.92 years.