Highbury leases on residential properties are gradually losing value. Where your lease has about ninety years left, you should start considering the need for a lease extension. An important point to note is that it is desirable for the lease extension to be in place before the term of the current lease dips lower than eighty years - otherwise a higher premium will be due. Leasehold owners in Highbury will usually be legally entitled to a lease extension; however it’s a good idea to check with a conveyancing solicitor to confirm your eligibility. In certain cases you may not be entitled. There are also strict deadlines and formalities to comply with once the process has commenced so it’s wise to be guided by a conveyancer during the process.
Leasehold residencies in Highbury 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 property. In such situations there is often little upside in purchasing the freehold unless savings on ground rent and service charges justify it.
| Lender | Requirement |
|---|---|
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Santander | If the property is leasehold, the remaining unexpired lease term at the end of the new mortgage term must be at least 50 years where any part of the mortgage is on Interest Only and 30 years if all loan parts are on Capital Repayment and Interest. You must report the unexpired lease term to us and await our instructions if:
|
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| 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 lawyers that we work with handle Highbury 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 protracted discussions with the landlord of her purpose-built flat in Highbury, Grace initiated the lease extension process as the 80 year threshold was fast advancing. The lease extension was concluded in November 2011. The freeholder’s costs were restricted to about 500 pounds.
Last Spring we were phoned by Dr Ethan Patel , who completed a garden apartment in Highbury in February 2011. We are asked if we could estimate the premium could be for a ninety year lease extension. Similar properties in Highbury with an extended lease were valued about £280,000. The average amount of ground rent was £55 billed yearly. The lease ended in 2105. Given that there were 79 years unexpired we calculated the premium to the landlord to extend the lease to be within £12,400 and £14,200 plus expenses.
An example of a Lease Extension case for a Highbury residence is Lower Flat 16A Beatty Road in September 2012. The premium payable was £13,577. The terms of the lease has been agreed between the Applicants and the First Respondent and the Tribunal did not seek to disturb that agreement. This case related to 1 flat.