The re-sale value of a leasehold property in City Of London is impacted by how many years the lease has left to run. If it is close to or less than 80 years you should expect difficulties on re-sale, so it is advisable to arrange for a lease extension before purchasing. It is ideal to start the process of extending the lease is when the lease still has 82 years unexpired so that a lease extension can be finalised prior to the eighty year mark. Current legislation entitles City Of London qualifying lessees to obtain a lease extension of 90 years on top of the remaining length of the lease at a peppercorn rent (that is, rent free). The purpose of the valuation is to arrive at an opinion of the premium payable by the lessee to the freeholder for the acquisition of the lease extension.
It is generally considered that a property with more than 100 years unexpired lease term is worth roughly the equivalent as a freehold. Where an additional 90 years added to all but the shortest lease, the residence will be worth the same as a freehold for decades to come.
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. |
Bank of Scotland | Minimum 70 years from the date of the mortgage. |
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. |
Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
Royal Bank of Scotland | Mortgage term plus 30 years. |
Irrespective of whether you are a tenant or a landlord in City Of London,the lease extension lawyers 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.
In 2014 Jonathan, came dangerously close to the 80-year mark with the lease on his one bedroom flat in City Of London. Having bought his home two decades ago, the lease term was of minimal concern. As luck would have it, he realised he would imminently be paying way over the odds for Extending the lease. Jonathan extended the lease just under the wire in April. Jonathan and the freeholder via the managing agents in the end agreed on sum of £5,500 . If the lease had gone lower than eighty years, the amount would have escalated by at least £1,150.
In 2010 we were contacted by Ms Melissa Wilson who, having completed a basement apartment in City Of London in August 1996. The question was if we could estimate the premium could be to extend the lease by an additional years. Identical homes in City Of London with an extended lease were worth £275,000. The mid-range ground rent payable was £65 invoiced monthly. The lease elapsed in 2093. Given that there were 68 years left we estimated the premium to the landlord for the lease extension to be within £13,300 and £15,400 not including expenses.
Last month we were called by Mr B Murphy , who completed a studio flat in City Of London in November 2001. The dilemma was if we could shed any light on how much (approximately) compensation to the landlord would likely be for a 90 year lease extension. Comparable homes in City Of London with 100 year plus lease were in the region of £208,600. The mid-range amount of ground rent was £60 invoiced per annum. The lease ran out on 18 February 2082. Having 57 years as a residual term we calculated the premium to the freeholder for the lease extension to be within £30,400 and £35,200 plus fees.