For anyone whose Heathrow home is held on a long lease, the message is clear – if you do nothing, your property will ultimately revert to the freeholder, leaving you empty-handed. The shorter the lease the less it is worth and the more it will cost to extend the lease.
Leasehold properties in Heathrow with over 100 years unexpired on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such circumstances there is often little to be gained by purchasing the reversionary interest unless savings on ground rent and service charges justify 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 are not acceptable. 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
Regardless of whether you are a tenant or a freeholder in Heathrow,the lease extension lawyers that we work with will always be prepared to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Heathrow valuers.
Milo owned a 2 bedroom flat in Heathrow being marketed with a lease of fraction over 61 years remaining. Milo on an informal basis contacted his landlord being a well known London-based freehold company for a lease extension. The freeholder was keen to give an extension on non-statutory terms taking the lease to 125 years on the basis of a new rent initially set at £100 per annum and increase every twenty five years thereafter. No ground rent would be payable on a lease extension were Milo to exercise his statutory right. Milo obtained expert legal guidance and secured an acceptable resolution without resorting to tribunal and sell the flat.
In 2010 we were called by Mr and Mrs. T Anderson who, having bought a recently refurbished flat in Heathrow in October 1997. We are asked if we could approximate the premium could be to prolong the lease by ninety years. Similar residencies in Heathrow with 100 year plus lease were valued around £191,400. The mid-range ground rent payable was £55 billed per annum. The lease ran out on 24 June 2080. Given that there were 54 years left we estimated the premium to the landlord for the lease extension to be between £34,200 and £39,600 plus expenses.
An example of a Lease Extension decision for a Heathrow premises is 147 Redford Close in June 2012. The Tribunal determined the lease extension premium to be at £4,200 This case related to 1 flat. The unexpired residue of the current lease was 82.93 years.