Covent Garden leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of the lease gets more expensive. Legislation has been in place for sometime now allowing qualifying Covent Garden residential leaseholders to extend the terms of long leases. If you are a leasehold owner in Covent Garden you really ought to check if your lease has between seventy and ninety years remaining. There are compelling reasons why a Covent Garden flat owner with a lease having around 80 years left should take steps to ensure that a lease extension is put in place without delay
It is generally accepted that a property with more than one hundred years remaining is worth approximately the equivalent as a freehold. Where an further 90 years added to all but the shortest lease, the property will be worth the same as a freehold for many years ahead.
| 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. |
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. Leases with fewer than 70 years should only be referred to the issuing office where the following scenario applies, as discretion may be applied subject to bank approval: • Property is located in any of the following prestigious developments: Cadogan, Crown, Grosvenor, Howard de Walden, Portman or Wellcome Trust Estates in Central London AND • The value of the property subject to the short remaining term is £500,000 or more AND • The loan to value does not exceed 90% for purchases, 90% like for like re-mortgages, 80% for re-mortgages with any element of capital raising and 80% for existing Barclays mortgage borrowers applying for additional borrowing; |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| 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 |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
Irrespective of whether you are a tenant or a freeholder in Covent Garden,the lease extension solicitors 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 Covent Garden valuers.
Edward was the the leasehold proprietor of a high value apartment in Covent Garden being sold with a lease of a little over sixty years remaining. Edward informally approached his landlord being a well known local-based freehold company for a lease extension. The landlord indicated a willingness to extend the lease to 125 years subject to a new rent to start with set at £150 per annum and doubled every twenty five years thereafter. No ground rent would be payable on a lease extension were Edward to invoke his statutory right. Edward obtained expert legal guidance and was able to make a more informed judgement and deal with the matter and sell the flat.
Ms Robyn Turner took over the lease of a first floor apartment in Covent Garden in January 2006. We are asked if we could estimate the premium would likely be to prolong the lease by ninety years. Identical flats in Covent Garden with a long lease were valued about £246,800. The mid-range ground rent payable was £60 billed every twelve months. The lease came to a finish in 2076. Having 50 years outstanding we estimated the premium to the landlord to extend the lease to be between £44,700 and £51,600 plus expenses.
An example of a Freehold Enfranchisement matter before the tribunal 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 related to 1 flat. The unexpired term as at the valuation date was 73.26 years.