The re-sale value of a leasehold property in City Of London depends on how many years the lease has left to run. If it is close to or less than 80 years you should expect problems on re-sale, so it is recommended to arrange for a lease extension prior to buying. It is ideal to start the lease extension process when a lease still has 82 years to run so that formalities can be concluded in advance of the 80 year cut off point. Current legislation enables City Of London qualifying lessees to a 90 year extension added to their remaining lease term (ie if your lease has 50 years left the statutory lease extension will provide a new term of 140 years). The reason of the valuation is to arrive at an opinion of the premium payable by the lessee to the freeholder for the purchase of the lease extension.
Leasehold premises in City Of London with more than one hundred years remaining on the lease are sometimes regarded as a ‘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 reversionary interest unless savings on ground rent and service charges justify it.
| Lender | Requirement |
|---|---|
| Barclays plc | |
| Barnsley Building Society | |
| Birmingham Midshires | |
| Halifax | |
| Virgin |
Using our service gives you enhanced control over the value of your City Of London leasehold, as your property will be more valuable and marketable in terms of lease length should you decide to sell. The lawyers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Sebastian was the the leasehold proprietor of a conversion flat in City Of London on the market with a lease of just over sixty years outstanding. Sebastian on an informal basis contacted his landlord a well known Bristol-based freehold company for a lease extension. The freeholder indicated a willingness to extend the lease to 125 years subject to a new rent to start with set at £100 per annum and increase every twenty five years thereafter. Ordinarily, ground rent would not be payable on a lease extension were Sebastian to invoke his statutory right. Sebastian procured expert advice and secured an acceptable deal informally and ending up with a market value flat.
In 2011 we were approached by Dr D Lefebvre who, having acquired a one bedroom apartment in City Of London in November 2012. The question was if we could approximate the price would be to prolong the lease by a further 90 years. Similar homes in City Of London with an extended lease were valued around £189,000. The mid-range amount of ground rent was £55 collected per annum. The lease ended in 2079. Considering the 53 years unexpired we estimated the compensation to the freeholder for the lease extension to be between £28,500 and £33,000 plus professional charges.
Last September we were contacted by Ms Amber Ricardo , who took over the lease of a purpose-built apartment in City Of London in March 2007. We are asked if we could approximate the premium could be for a 90 year extension to my lease. Identical homes in City Of London with 100 year plus lease were worth £290,000. The average amount of ground rent was £45 collected every twelve months. The lease ran out on 2 July 2099. Given that there were 73 years remaining we approximated the premium to the freeholder for the lease extension to be within £8,600 and £9,800 exclusive of expenses.