Covent Garden leases on residential properties are gradually diminishing in value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of your lease gets more expensive. Legislation has been in place for sometime now which entitles qualifying Covent Garden residential leaseholders to extend the terms of long leases. Where you are a leasehold owner in Covent Garden you really ought to see if your lease has between 70 and 90 years remaining. In particular once the remaining lease term slips under eighty years, the compensation to the landlord for any lease extension sharply increases as an element of the premium you pay is what is known as a marriage value
Leasehold residencies in Covent Garden with more than one hundred years left on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such situations there is often little to be gained by buying the reversionary interest unless savings on ground rent and service charges warrant it.
| Lender | Requirement |
|---|---|
| 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. |
| Godiva Mortgages | 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must also be not less than 75 years at the outset of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The lawyers that we work with procure Covent Garden 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 lawyer we work with provide it.
Half a year ago Leo, came very close to the 80-year threshold with the lease on his first floor apartment in Covent Garden. Having purchased his home two decades ago, the lease term was of no concern. Luckily, he recognised he needed to take action soon on a lease extension. Leo arranged for a lease extension at the eleventh hour in January. Leo and the freeholder via the managing agents ultimately agreed on the final figure of £5,000 . If he failed to meet the deadline, the price would have escalated by at least £1,125.
Last Spring we were approach by Dr Leah Lefebvre , who owned a newly refurbished flat in Covent Garden in April 2009. We are asked if we could estimate the price could be to prolong the lease by a further 90 years. Identical homes in Covent Garden with 100 year plus lease were worth £270,000. The average ground rent payable was £55 billed annually. The lease concluded in 2099. Taking into account 74 years left we estimated the compensation to the landlord to extend the lease to be between £9,500 and £11,000 plus fees.
An example of a Freehold Enfranchisement case for a Covent Garden property is 20 Avonwick Road in July 2013. The Tribunal was dealing with an application under Section 26 of the Leasehold Reform Housing and Urban Development Act 1993 for a determination of the freehold value of the property. It was concluded that the price to be paid was Fifteen Thousand Nine Hundred and Seventy (£15,970) divided as to £8,200 for Flat 20 and £7,770 for Flat 20A This case related to 1 flat. The number of years remaining on the existing lease(s) was 73.26 years.