Hampstead leases on residential properties are gradually diminishing in value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of the lease becomes more expensive. Legislation has been in place for sometime now allowing qualifying Hampstead residential leaseholders to extend the terms of long leases. If you are a leasehold owner in Hampstead you should investigate if your lease has between 70 and 90 years left. In particular once the remaining lease term slips under 80 years, the premium due on any lease extension increases dramatically as part of the premium you will incur is what is known as a marriage value
It is conventional wisdom that a residential leasehold with more than 100 years unexpired lease term is worth approximately the same as a freehold. Where an additional ninety years added to any lease with more than 35 years unexpired, the property will be equivalent in value to a freehold for many years ahead.
| 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; |
| Halifax | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. |
| 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The conveyancers that we work with handle Hampstead lease extensions and help protect your position. A lease extension can be arranged to be completed to coincide with a change of ownership so the costs of the lease extension are paid for using part of the sale proceeds. You really do need expert legal advice in this difficult and technical area of law. The conveyancing solicitor we work with provide it.
Off the back of unsuccessful negotiations with the freeholder of her one bedroom flat in Hampstead, Emily started the lease extension process just as her lease was nearing the critical 80-year deadline. The legal work completed in August 2014. The freeholder’s fees were restricted to about 600 pounds.
In 2011 we were approached by Dr C Scott who, having took over the lease of a ground floor flat in Hampstead in September 2002. We are asked if we could approximate the price would likely be for a ninety year lease extension. Comparative flats in Hampstead with an extended lease were in the region of £183,600. The average amount of ground rent was £65 invoiced annually. The lease elapsed on 8 March 2082. Given that there were 57 years unexpired we approximated the premium to the freeholder to extend the lease to be within £28,500 and £33,000 plus professional charges.
An example of a Lease Extension decision for a Hampstead premises is Raised Ground Floor Flat 20 Fitzjohns Avenue in July 2014. the Tribunal decided that the premiums to be paid for new leases in respect of the Raised Ground Floor Flat and the First Floor Flat were to be calculated as: Raised Ground Floor: £765,175.14 First Floor: £601,617.77 This case was in relation to 2 flats. The unexpired term was 16.83 and 16.43.