Owning a flat usually means owning a lease of the property, this is a ‘time-limited’ interest becoming shorter every day. your lease will normally be granted for a set period of time , ordinarily 99 or 125 years, although we have come across longer and shorter terms in Covent Garden. Inevitably, the length of lease remaining reduces over time. This is often overlooked and only raises itself as an issue when the property needs to be sold or re-mortgaged. The shorter the lease the lower the value of the property and the more it will cost to obtain a lease extension. Eligible long lease owners in Covent Garden have the legal entitlement to extend the lease for an additional 90 years under legislation. Do give careful deliberation before putting off your Covent Garden lease extension. Holding off that expense now likely increases the price you will eventually have to pay for a lease extension
Leasehold premises in Covent Garden with over 100 years unexpired on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such circumstances there is often little to be gained by buying the reversionary interest unless savings on ground rent and service charges warrant it.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage should be declined (see exception below). Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office. 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. |
| 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. |
Engaging our service will provide you better control over the value of your Covent Garden leasehold, as your property will be more valuable and saleable in respect of lease length should you want to sell. The conveyancers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Trailing protracted correspondence with the freeholder of her leasehold apartment in Covent Garden, Natasha initiated the lease extension process just as the lease was coming close to the all-important 80-year deadline. The lease extension was finalised in September 2015. The freeholder’s charges were restricted to under 700 pounds.
Mrs P Fournier acquired a studio flat in Covent Garden in January 2011. We are asked if we could approximate the premium would likely be to extend the lease by 90 years. Identical properties in Covent Garden with a long lease were in the region of £193,400. The mid-range amount of ground rent was £65 invoiced annually. The lease concluded on 25 May 2084. Having 59 years left we estimated the premium to the freeholder to extend the lease to be within £21,900 and £25,200 not including expenses.
An example of a Freehold Enfranchisement case for a Covent Garden flat 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 lease term was 73.26 years.