The re-sale value of a leasehold property in City Of London is impacted by how many years the lease has remaining. If it is close to or fewer than 80 years you should foresee problems on re-sale, so it is advisable to arrange for the lease to be extended before buying. Ideally one should start the process of extending the lease is when a lease still has 82 years unexpired so that all matters can be finalised ahead of the 80 year mark. Statute entitles City Of London qualifying lessees to an additional term of ninety years on top of the unexpired term, at a nominal rent (zero ground rent). The purpose of the valuation is to determine the sum payable by the lessee to the freeholder for the acquisition of the lease extension.
It is conventional wisdom that a residential leasehold with in excess of 100 years unexpired lease term is worth roughly the same as a freehold. Where an further ninety years added to any lease with more than 35 years left, the premises will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 30 years plus the term of the mortgage at the outset of the mortgage. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| Yorkshire 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. |
The lawyers that we work with undertake City Of London 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 conveyancing solicitor we work with provide it.
Half a year ago Tyler, came dangerously close to the 80-year mark with the lease on his purpose- built flat in City Of London. Having bought his property two decades ago, the length of the lease was of no importance. by good luck, it dawned on him that he needed to take steps soon on a lease extension. Tyler extended the lease just under the wire last May. Tyler and the freeholder in the end settled on the final figure of £5,500 . If the lease had fallen to less than 80 years, the price would have increased by at least £1,025.
Last September we were called by Mr Leo Morris , who bought a one bedroom apartment in City Of London in April 2008. The question was if we could estimate the premium could be to extend the lease by a further 90 years. Comparative residencies in City Of London with a long lease were worth £275,000. The mid-range ground rent payable was £65 collected quarterly. The lease finished on 12 August 2094. Having 68 years remaining we approximated the compensation to the freeholder to extend the lease to be between £12,400 and £14,200 exclusive of fees.
In 2009 we were e-mailed by Mr I Wright who, having bought a one bedroom flat in City Of London in June 2004. The dilemma was if we could approximate the compensation to the landlord would be to prolong the lease by a further 90 years. Comparative residencies in City Of London with a long lease were in the region of £208,600. The average ground rent payable was £60 billed quarterly. The lease ended in 2083. Having 57 years outstanding we approximated the premium to the landlord for the lease extension to be within £30,400 and £35,200 exclusive of legals.