The re-sale value of a leasehold property in Fitzrovia is impacted by how many years the lease has remaining. If it is near to or fewer than 80 years you should anticipate problems on re-sale, so it is advisable to arrange for a lease extension ahead of buying. It is preferable to start the lease extension process when the lease still has 82 years unexpired so that a lease extension can be concluded well before the eighty year mark. Statute enables Fitzrovia qualifying lessees to obtain a new lease which will be for the balance of the existing lease plus an additional term of ninety years. The intention of the valuation is to determine the amount payable by the lessee to the freeholder for the acquisition of the lease extension.
It is generally accepted that a property with over one hundred years remaining is worth approximately the same as a freehold. Where an additional ninety years added to all but the shortest lease, the residence will be equivalent in value to 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 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; |
| 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Lease extensions in Fitzrovia can be a difficult process. We recommend you get guidance from a lawyer 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 Fitzrovia lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.
Teddy owned a conversion apartment in Fitzrovia being sold with a lease of just over fifty eight years outstanding. Teddy informally approached his landlord a well known London-based freehold company for a lease extension. The freeholder indicated a willingness to extend the lease to 125 years subject to a new rent to start with set at £150 per annum and increase every 25 years thereafter. Ordinarily, ground rent would not be due on a lease extension were Teddy to exercise his statutory right. Teddy procured expert advice and was able to make a more informed judgement and deal with the matter and readily saleable.
In 2011 we were e-mailed by Mr C Nelson who, having acquired a one bedroom apartment in Fitzrovia in January 1997. We are asked if we could estimate the compensation to the landlord could be to prolong the lease by a further 90 years. Comparative premises in Fitzrovia with an extended lease were in the region of £264,000. The average ground rent payable was £60 collected per annum. The lease concluded on 16 May 2078. Considering the 53 years unexpired we calculated the compensation to the landlord to extend the lease to be between £37,100 and £42,800 not including fees.
An example of a Freehold Enfranchisement matter before the tribunal for a Fitzrovia property 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.