It’s an underpublicised certainty that a Clerkenwell residential lease is a deteriorating asset. As the lease term reduces so does the value of the property. The extent of this is taken for granted in the early years due to the loss of value being disguised by increases in the Clerkenwell property prices.Once your lease nears 85ish years, you need to start thinking about a lease extension. If lease term dips below 80 years, you will end up paying 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of additional value that a lease extension will add the property Most leasehold owners in Clerkenwell will be able to extend under the legislation; however a conveyancing solicitor should be able to clarify whether you qualify for an extension. In some cases you may not qualify. There are also strict timeframes and procedures to be adhered to once the process is instigated and you will need to be guided by your conveyancing solicitor throughout the formalities.
It is conventional wisdom that a residential leasehold with in excess of 100 years unexpired lease term is worth approximately the same as a freehold. Where an additional 90 years added to all but the shortest lease, the residence will be equivalent in value to a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
| 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 |
| 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. |
Retaining our service gives you increased control over the value of your Clerkenwell leasehold, as your property will be more valuable and marketable in terms of lease length should you want to sell. The lawyers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Last year Tyler, came precariously close to the 80-year threshold with the lease on his basement flat in Clerkenwell. Having bought his property 18 years previously, the unexpired term was of little significance. Luckily, it dawned on him that he needed to take steps soon on Extending the lease. Tyler arranged for a lease extension just under the wire last March. Tyler and the landlord ultimately agreed on an amount of £5,000 . If he had missed the deadline, the amount would have gone up by a minimum £1,100.
Last month we were phoned by Mr and Mrs. W Martinez , who moved into a one bedroom apartment in Clerkenwell in May 1997. The question was if we could shed any light on how much (roughly) price would be to extend the lease by an additional years. Comparative residencies in Clerkenwell with a long lease were worth £265,000. The average amount of ground rent was £50 billed monthly. The lease ended on 17 May 2099. Considering the 73 years as a residual term we estimated the compensation to the landlord for the lease extension to be within £9,500 and £11,000 exclusive of costs.
An example of a Lease Extension matter before the tribunal for a Clerkenwell residence is Flat 89 Trinity Court Grays Inn Road in February 2013. the Tribunal found that the premium to be paid by the tenant on the grant of a new lease, in accordance with section 56 and Schedule 13 to the Leasehold Reform, Housing and Urban Development Act 1993 should be £36,229. This case related to 1 flat. The unexpired term as at the valuation date was 66.8 years.