For those whose City Of London home is held on a long lease, the message is clear – if nothing is done, the property will eventually revert to the freeholder, leaving you empty-handed. The shorter the lease the lower the value of the property and the more it will cost to obtain a lease extension.
Leasehold residencies in City Of London with over one hundred years unexpired on the lease are sometimes 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 to be gained by buying the freehold unless savings on ground rent and service 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. |
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
Lease extensions in City Of London can be a difficult process. We recommend you get guidance from a lawyer and valuer 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 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.
In 2014 Luca, started to get near to the eighty-year mark with the lease on his basement flat in City Of London. In buying his flat two decades ago, the length of the lease was of little interest. Luckily, he became aware that he would imminently be paying an inflated amount for Extending the lease. Luca was able to extend his lease just ahead of time last June. Luca and the freeholder subsequently settled on a premium of £5,500 . If the lease had dipped to less than eighty years, the premium would have become more costly by at least £1,025.
In 2013 we were approached by Mr and Mrs. P Mercier who, having completed a garden apartment in City Of London in May 2004. The question was if we could shed any light on how much (roughly) price could be for a ninety year extension to my lease. Comparable residencies in City Of London with a long lease were valued about £225,800. The mid-range ground rent payable was £60 billed yearly. The lease came to a finish in 2086. Considering the 60 years outstanding we estimated the compensation to the freeholder for the lease extension to be between £24,700 and £28,600 exclusive of costs.
Last month we were contacted by Mrs Amber Rogers , who bought a ground floor apartment in City Of London in August 2011. The question was if we could shed any light on how much (roughly) compensation to the landlord would likely be to prolong the lease by 90 years. Comparative residencies in City Of London with 100 year plus lease were valued about £210,000. The average amount of ground rent was £50 invoiced yearly. The lease terminated in 2106. Having 80 years outstanding we calculated the compensation to the freeholder to extend the lease to be between £8,600 and £9,800 not including expenses.