City Of London leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of your lease gets more expensive. The majority of owners of residential leasehold property in City Of London enjoy rights under legislation to extend the terms of their leases. If you are a leasehold owner in City Of London you would be well advised to see if your lease has between seventy and ninety years remaining. In particular once the remaining lease term slips under 80 years, the premium due on any lease extension increases dramatically as part of the premium you will incur is what is known as a marriage value
Leasehold residencies in City Of London with in excess of 100 years left on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such situations there is often little to be gained by purchasing the freehold unless savings on ground rent and estate charges warrant it.
| Lender | Requirement |
|---|---|
| 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; |
| 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. |
| 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Lease extensions in City Of London can be a difficult process. We recommend you get guidance from a conveyancing solicitor and valuer with experience in lease extensions.
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 City Of London lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.
Off the back of unsuccessful discussions with the landlord of her purpose-built flat in City Of London, Abigail commenced the lease extension process as the eighty year mark was swiftly nearing. The lease extension completed in August 2014. The freeholder’s costs were negotiated to slightly above 450 GBP.
Last Autumn we were phoned by Mr and Mrs. K Carter , who moved into a one bedroom apartment in City Of London in October 2010. We are asked if we could estimate the compensation to the landlord could be to extend the lease by ninety years. Identical premises in City Of London with a long lease were in the region of £205,000. The average amount of ground rent was £50 collected per annum. The lease elapsed on 12 November 2103. Having 78 years as a residual term we approximated the premium to the freeholder to extend the lease to be between £8,600 and £9,800 not including expenses.
In 2012 we were phoned by Mr and Mrs. H Lefèvre who, having acquired a basement apartment in City Of London in May 2007. The question was if we could approximate the compensation to the landlord could be to prolong the lease by a further 90 years. Similar properties in City Of London with an extended lease were valued about £267,600. The average amount of ground rent was £65 billed yearly. The lease came to a finish in 2092. Considering the 67 years unexpired we estimated the premium to the freeholder for the lease extension to be between £14,300 and £16,400 exclusive of costs.