The market value of a leasehold property in Clerkenwell is impacted by how long the lease has remaining. If it is close to or fewer than 80 years you should expect difficulties on re-sale, so it is recommended to arrange for a lease extension prior to buying. It is preferable to commence the process of extending the lease is when the lease still has 82 years unexpired so that all matters can be finalised ahead of the 80 year mark. Statute enables Clerkenwell qualifying lessees to obtain a lease extension of ninety years on top of the remaining length of the lease at a peppercorn rent (that is, rent free). The intention of the valuation is to determine the sum payable by the lessee to the freeholder for the purchase of the lease extension.
Leasehold residencies in Clerkenwell with over one hundred years remaining on the lease are often referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such situations there is often little to be gained by buying the freehold unless savings on ground rent and estate charges merit it.
| Lender | Requirement |
|---|---|
| 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| 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. |
The lawyers that we work with undertake Clerkenwell lease extensions and help protect your position. A lease extension can be arranged to be completed to coincide with a change of ownership so the costs of the lease extension are paid for using part of the sale proceeds. You really do need expert legal advice in this difficult and technical area of law. The conveyancing solicitor we work with provide it.
Freddie was the the leasehold owner of a conversion apartment in Clerkenwell on the market with a lease of a little over 59 years outstanding. Freddie on an informal basis spoke with his freeholder a well known Bristol-based freehold company for a lease extension. The landlord indicated a willingness to grant an extension taking the lease to 125 years subject to a new rent initially set at £200 per annum and doubled every 25 years thereafter. No ground rent would be payable on a lease extension were Freddie to exercise his statutory right. Freddie procured expert advice and was able to make an informed judgement and handle with the matter and ending up with a market value flat.
In 2014 we were contacted by Dr Paige Jackson who, having owned a one bedroom flat in Clerkenwell in February 1997. The dilemma was if we could estimate the compensation to the landlord could be to extend the lease by a further 90 years. Identical premises in Clerkenwell with 100 year plus lease were in the region of £285,000. The mid-range amount of ground rent was £55 invoiced annually. The lease lapsed in 2106. Taking into account 80 years as a residual term we estimated the compensation to the landlord for the lease extension to be between £12,400 and £14,200 not including legals.
An example of a Lease Extension decision for a Clerkenwell premises 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 affected 1 flat. The unexpired term as at the valuation date was 66.8 years.