With a residential leasehold property in Covent Garden, you effectively rent it for a certain period of time. These days flat leases typically tend to be for 99 years or 125. Even though this may appear like a lengthy period of time, you should think about extending the lease sooner rather than later. Accepted thinking is that the shorter the number of years is the cost of extending the lease gets disproportionately greater particularly once there are less than eighty years left. Anyone in Covent Garden with a lease approaching 81 years remaining should seriously consider extending it as soon as possible. Once the lease term has less than eighty years remaining, under the current statute the freeholder is entitled to calculate and charge a larger amount, based on a technical calculation, strangely termed as “marriage value” which is due.
It is conventional wisdom that a property with in excess of 100 years remaining is worth approximately the equivalent as a freehold. Where an additional 90 years added to all but the shortest lease, the residence will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| 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; |
| Coventry Building Society | 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 be at least 75 years plus the term of the mortgage at the outset of the mortgage. |
| 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. |
Lease extensions in Covent Garden can be a difficult process. We recommend you get guidance from a conveyancer and surveyor well versed in the legislation and lease extension process.
We provide you with an expert from a selection of lease extension solicitors, which ensures a targeted and efficient service as you have a dedicated port of call with an individual lawyer. Our lease extension solicitors have in-depth market knowledge dealing with Covent Garden lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.
Last year Kai, came perilously near 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 little relevance. As luck would have it, it dawned on him that he would imminently be paying an escalated premium for Extending the lease. Kai arranged for a lease extension at the eleventh hour last July. Kai and the landlord in the end settled on sum of £5,500 . If the lease had dipped lower than 80 years, the price would have become more costly by a minimum £1,050.
In 2014 we were contacted by Dr Luca Vincent who, having moved into a purpose-built apartment in Covent Garden in January 2010. We are asked if we could estimate the premium would be for a ninety year extension to my lease. Similar properties in Covent Garden with a long lease were valued about £280,000. The mid-range amount of ground rent was £55 collected yearly. The lease terminated on 22 April 2103. Having 77 years as a residual term we estimated the premium to the freeholder for the lease extension to be within £13,300 and £15,400 not including fees.
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 related to 1 flat. The remaining number of years on the lease was 73.26 years.