It’s an underpublicised certainty that a City Of London residential lease is a wasting asset. As the lease term diminishes so does the value of the property. The extent of this is not fully appreciated in the early years due to the deflation being disguised by increases in the City Of London property prices.Where your lease has approximately ninety years left, you need to start considering a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease slips below 80 years - otherwise a higher premium will be due. The majority of flat owners in City Of London will be able to extend under the legislation; however a lawyer should be able to confirm if you are eligibility. In some cases you may not be entitled. There are also strict deadlines and procedures to be adhered to once the process has commenced and you will need to be guided by your conveyancer for the duration of the process.
It is conventional wisdom that a property with over 100 years unexpired lease term is worth roughly the same as a freehold. Where an additional 90 years added to all but the shortest lease, the property will be worth the same as a freehold for many years ahead.
| 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. |
| 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
| 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. |
Regardless of whether you are a tenant or a landlord in City Of London,the lease extension solicitors that we work with will always be happy to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with City Of London valuers.
Alex was the the leasehold proprietor of a studio apartment in City Of London being sold with a lease of just over 59 years outstanding. Alex informally spoke with his landlord being a well known local-based freehold company for a lease extension. The freeholder was keen to give an extension on non-statutory terms taking the lease to 125 years subject to an increased rent to £50 per annum. Ordinarily, ground rent would not be due on a lease extension were Alex to invoke his statutory right. Alex procured expert legal guidance and was able to make a more informed judgement and handle with the matter and ending up with a market value flat.
Last month we were phoned by Mrs Rachel Stewart , who acquired a purpose-built apartment in City Of London in November 2003. We are asked if we could shed any light on how much (approximately) premium would be to prolong the lease by a further 90 years. Comparable residencies in City Of London with an extended lease were worth £191,400. The mid-range ground rent payable was £55 invoiced annually. The lease came to a finish on 7 October 2079. Taking into account 54 years remaining we calculated the compensation to the landlord to extend the lease to be within £34,200 and £39,600 exclusive of expenses.
Dr E Kelly owned a garden flat in City Of London in October 2011. The question was if we could estimate the price could be for a ninety year lease extension. Comparable premises in City Of London with 100 year plus lease were valued around £295,000. The average ground rent payable was £45 billed per annum. The lease terminated in 2099. Taking into account 74 years remaining we calculated the premium to the freeholder for the lease extension to be within £8,600 and £9,800 not including costs.