Fitzrovia leases on domestic properties are gradually losing value. Where your lease has in the region of 90 years unexpired, you should start thinking about a lease extension. If lease term falls under eighty years, you will then be required to pay half of the property's 'marriage value' in addition to the usual cost of the lease extension to your landlord. Marriage value is the amount of additional value that a lease extension will add to the property. Flat owners in Fitzrovia will mostly be legally entitled to a lease extension; however It would be wise to check with a lawyer to confirm your eligibility. In some cases you may not qualify. There are also strict timetables and formalities to comply with once the process has started so it’s wise to be guided by a conveyancer during the process.
It is generally accepted that a residential leasehold with over 100 years remaining is worth approximately the equivalent as a freehold. Where an further ninety years added to all but the shortest lease, the residence 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. |
| 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; |
| 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. For Shared Ownership, the remaining term of the lease must also be not less than 75 years at the outset of the mortgage. |
Retaining our service gives you better control over the value of your Fitzrovia leasehold, as your property will be more valuable and marketable in terms of lease length should you wish to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
John owned a studio flat in Fitzrovia on the market with a lease of a little over 72 years outstanding. John on an informal basis spoke with his freeholder a well known London-based freehold company for a lease extension. The freeholder indicated a willingness to grant an extension taking the lease to 125 years on the basis of an increased rent to £50 per annum. Ordinarily, ground rent would not be payable on a lease extension were John to invoke his statutory right. John obtained expert legal guidance and was able to make an informed judgement and deal with the matter and sell the flat.
Mrs Samantha Morgan took over the lease of a ground floor flat in Fitzrovia in October 2006. We are asked if we could estimate the price would likely be to prolong the lease by 90 years. Comparable residencies in Fitzrovia with an extended lease were worth £254,200. The mid-range ground rent payable was £60 collected per annum. The lease expired in 2077. Given that there were 51 years remaining we estimated the premium to the freeholder for the lease extension to be within £43,700 and £50,600 plus legals.
An example of a Freehold Enfranchisement decision 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 affected 1 flat. The unexpired term was 73.26 years.