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 , ordinarily 99 or 125 years, although we have witnessed longer and shorter terms in Hampstead. Clearly, the length of lease left shortens as time goes by. This may slip by relatively unnoticed when the residence has to be disposed of or re-mortgaged. The fewer the years remaining the less it is worth and the more it will cost to extend the lease. Qualifying long lease owners in Hampstead have the legal entitlement to extend the lease for an additional ninety years under the 1993 Leasehold Reform Act. You should give careful deliberation before putting off your Hampstead lease extension. Holding off that expense now likely increases the price you will ultimately incur to extend your lease
Leasehold properties in Hampstead with in excess of one hundred years outstanding on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such situations there is often little upside in purchasing the reversionary interest unless savings on ground rent and service charges warrant it.
| 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. |
| 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| 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. |
The conveyancers that we work with undertake 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 conveyancer we work with provide it.
Half a year ago Joshua, came very near to the 80-year threshold with the lease on his ground floor flat in Hampstead. Having bought his home 19 years ago, the unexpired term was of minimal significance. As luck would have it, he recognised he would imminently be paying an inflated amount for a lease extension. Joshua was able to extend his lease just ahead of time in July. Joshua and the freeholder via the managing agents eventually agreed on sum of £5,500 . If he failed to meet the deadline, the sum would have escalated by a minimum £900.
In 2012 we were e-mailed by Mr Milo Bell who, having owned a ground floor flat in Hampstead in November 1997. The question was if we could approximate the compensation to the landlord could be for a ninety year extension to my lease. Comparable homes in Hampstead with a long lease were worth £227,800. The average amount of ground rent was £45 invoiced per annum. The lease ended in 2089. Considering the 65 years unexpired we estimated the premium to the landlord for the lease extension to be within £13,300 and £15,400 not including expenses.
An example of a Lease Extension case for a Hampstead property 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 affected 2 flats. The unexpired lease term was 16.83 and 16.43.