Owning a apartment usually means owning a lease of the property, which has a finite term of years. This lease will ordinarily be granted for a set period of time , usually 99 or 125 years, although we have seen longer and shorter terms in Covent Garden. Clearly, the length of lease left shortens as time goes by. This may slip by relatively unnoticed when the residence needs to be disposed of or refinanced. The fewer the years remaining the less it is worth and the more expensive it will be to extend the lease. Eligible leaseholders in Covent Garden have the legal entitlement to extend the lease for a further 90 years in accordance with statute. Please give careful consideration before delaying your Covent Garden lease extension. Putting off that expense now simply increases the price you will eventually incur for a lease extension
It is generally accepted that a residential leasehold with more than one hundred years remaining is worth approximately the equivalent as a freehold. Where an further 90 years added to any lease with more than 35 years remaining, the premises will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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; |
| 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Retaining our service gives you increased 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 wish to sell. The conveyancing solicitors that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Eli was the the leasehold owner of a studio flat in Covent Garden on the market with a lease of just over 72 years left. Eli on an informal basis contacted his landlord being a well known local-based freehold company and enquired on a premium to extend the lease. The freeholder was keen to agree an extension on non-statutory terms taking the lease to 125 years on the basis of a rise in the rent to £100 yearly. Ordinarily, ground rent would not be due on a lease extension were Eli to exercise his statutory right. Eli obtained expert legal guidance and secured an acceptable resolution informally and ending up with a market value flat.
In 2012 we were contacted by Mr and Mrs. R David who, having completed a purpose-built flat in Covent Garden in November 1998. We are asked if we could shed any light on how much (roughly) premium could be for a ninety year extension to my lease. Identical premises in Covent Garden with an extended lease were in the region of £261,600. The average amount of ground rent was £60 invoiced annually. The lease end date was on 14 January 2078. Having 52 years left we approximated the compensation to the freeholder for the lease extension to be between £39,000 and £45,000 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 was in relation to 1 flat. The unexpired residue of the current lease was 73.26 years.