The value of Covent Garden leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The cost of extending the lease can increase significantly once the remaining term is below than 80 years
It is generally accepted that a residential leasehold with more than 100 years unexpired lease term is worth approximately the equivalent as a freehold. Where an further ninety years added to any lease with more than 45 years remaining, the residence will be equivalent in value to a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date 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. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Engaging our service gives you enhanced control over the value of your Covent Garden leasehold, as your property will be more valuable and marketable in respect of lease length should you decide to sell. The conveyancing solicitors that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
In 2014 Aiden, started to get near to the 80-year threshold with the lease on his first floor apartment in Covent Garden. Having purchased his property two decades ago, the lease term was of minimal importance. As luck would have it, he noticed he needed to take action soon on a lease extension. Aiden extended the lease just ahead of time in April. Aiden and the freeholder eventually agreed on an amount of £5,500 . If the lease had dropped below 80 years, the sum would have become more costly by at least £875.
In 2010 we were approached by Mr and Mrs. G Jones who, having acquired a studio flat in Covent Garden in April 2006. We are asked if we could approximate the compensation to the landlord would be for a 90 year extension to my lease. Comparable premises in Covent Garden with an extended lease were worth £215,600. The average ground rent payable was £45 invoiced annually. The lease lapsed in 2088. Considering the 62 years as a residual term we approximated the compensation to the landlord for the lease extension to be within £18,100 and £20,800 exclusive of expenses.
An example of a Freehold Enfranchisement decision for a Covent Garden premises 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 affected 1 flat. The unexpired term was 73.26 years.