When it comes to domestic leasehold premises in City Of London, you are actually buying a right to reside in a property for a set period of time. These days flat leases typically tend to be for 99 years or 125. Many leasehold owners become complacent as this seems like a lengthy period of time, you should think about a lease extension sooner as opposed to later. The general rule is that the shorter the number of years is the cost of extending the lease increases markedly especially once there are less than eighty years left. Anyone in City Of London with a lease approaching 81 years unexpired should seriously think of extending it as soon as possible. Once the lease term has below eighty years remaining, under the relevant legislation the landlord can calculate and charge a larger premium, assessed on a technical computation, strangely termed as “marriage value” which is payable.
It is conventional wisdom that a residential leasehold with over one hundred years unexpired lease term is worth roughly the same as a freehold. Where an additional ninety years added to all but the shortest lease, the property will be equivalent in value to a freehold for decades to come.
| Lender | Requirement |
|---|---|
| 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; |
| Chelsea 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. |
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
Lease extensions in City Of London can be a difficult process. We recommend you procure professional help from a conveyancer 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 procuring 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.
Connor was the the leasehold proprietor of a conversion apartment in City Of London being sold with a lease of a few days over 61 years remaining. Connor on an informal basis contacted his landlord being a well known Manchester-based freehold company and enquired on a premium to extend the lease. The landlord indicated a willingness to grant an extension taking the lease to 125 years subject to a rise in the rent to £125 annually. No ground rent would be payable on a lease extension were Connor to invoke his statutory right. Connor procured expert legal guidance and was able to make a more informed judgement and deal with the matter and sell the property.
Dr Chloe Richardson owned a first floor flat in City Of London in July 2006. The dilemma was if we could approximate the price could be to extend the lease by a further 90 years. Similar homes in City Of London with an extended lease were worth £295,000. The average amount of ground rent was £45 billed per annum. The lease finished on 20 May 2099. Given that there were 74 years as a residual term we estimated the compensation to the landlord to extend the lease to be within £9,500 and £11,000 exclusive of expenses.
Mr and Mrs. C Turner purchased a garden flat in City Of London in October 2002. The dilemma was if we could estimate the price would be for a 90 year extension to my lease. Similar homes in City Of London with a long lease were valued around £243,000. The mid-range ground rent payable was £65 invoiced annually. The lease expired on 12 September 2088. Considering the 63 years left we approximated the premium to the landlord to extend the lease to be between £20,000 and £23,000 plus costs.