It’s an underpublicised certainty that a Chinatown residential lease is a deteriorating asset. As the lease term diminishes so does the value of the property. The extent of this is taken for granted in the early years due to the loss of value being disguised by increases in the Chinatown property prices.Where your lease has approximately 90 years left, you should start considering a lease extension. If the number of years remaining drops below 80 years, you will end up paying half of the property's 'marriage value' on top of the usual cost of the lease extension to the landlord. The marriage fee is the amount of extra value that a lease extension will add the property The majority of leasehold owners in Chinatown will be able to extend under the legislation; however a conveyancer should be able to confirm whether you qualify for an extension. In some cases you may not be entitled. There are also strict timeframes and procedures to be adhered to once the process is instigated and you will need to be guided by your lawyer for the duration of the formalities.
Leasehold premises in Chinatown with in excess of 100 years unexpired 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 circumstances there is often little to be gained by purchasing the reversionary interest unless savings on ground rent and estate 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. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Godiva Mortgages | 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. |
| 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. |
Regardless of whether you are a tenant or a landlord in Chinatown,the lease extension lawyers that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Chinatown valuers.
After unsuccessful negotiations with the freeholder of her purpose-built flat in Chinatown, Rachael initiated the lease extension process just as her lease was approaching the all-important 80-year threshold. The transaction was finalised in June 2006. The freeholder’s charges were kept to an absolute minimum.
Dr Samantha Garcia was assigned a lease of a basement flat in Chinatown in May 1997. We are asked if we could shed any light on how much (approximately) premium would be to extend the lease by a further 90 years. Identical homes in Chinatown with an extended lease were valued around £240,600. The average amount of ground rent was £60 collected per annum. The lease expiry date was on 14 June 2088. Having 62 years remaining we calculated the compensation to the freeholder for the lease extension to be within £21,900 and £25,200 not including professional charges.
An example of a Freehold Enfranchisement case for a Chinatown property is 36 New Wanstead in August 2010. The Tribunal arrived at a valuation of the premium for the freehold of £22,359. This case affected 2 flats. The unexpired lease term was 73.92 years.