When it comes to residential leasehold premises in Hollywood, you are actually buying a right to reside in a property for a prescribed time frame. Modern flat leases are usually granted for 99 years or 125. Even though this may appear like a lengthy period of time, you should consider a lease extension sooner as opposed to later. Accepted thinking is that the shorter the number of years is the cost of extending the lease becomes disproportionately greater particularly when there are less than 80 years left. Anyone in Hollywood with a lease approaching 81 years remaining should seriously consider extending it without delay. When the lease term has less than 80 years left, under the current Act the landlord is entitled to calculate and charge a larger amount, based on a technical multiplication, strangely termed as “marriage value” which is payable.
It is conventional wisdom 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 equivalent in value to a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| 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. |
| 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. |
| Godiva Mortgages | A minimum of 70 years unexpired lease at completion for all scheme types apart from Lifetime Mortgages (Equity Release), which require a minimum unexpired term of 80 years at completion. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
Lease extensions in Hollywood can be a difficult process. We recommend you procure guidance from a lawyer and valuer well versed in the legislation and lease extension process.
We provide you with an expert from a selection of lease extension solicitors, which ensures a targeted and efficient service as you have a dedicated port of call with an individual lawyer. Our lease extension solicitors have in-depth market knowledge dealing with Hollywood lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.
Last October Alfie, started to get close to the 80-year threshold with the lease on his garden apartment in Hollywood. Having purchased his home two decades ago, the lease term was of minimal concern. As luck would have it, he realised he needed to take steps soon on Extending the lease. Alfie extended the lease just under the wire last March. Alfie and the freeholder ultimately settled on an amount of £6,000 . If he had missed the deadline, the premium would have increased by a minimum £1,000.
In 2010 we were e-mailed by Mr and Mrs. L James who, having completed a purpose-built apartment in Hollywood in January 2003. The dilemma was if we could estimate the premium could be for a 90 year lease extension. Comparable properties in Hollywood with 100 year plus lease were valued about £275,000. The average amount of ground rent was £55 billed per annum. The lease ran out in 2102. Considering the 76 years as a residual term we estimated the compensation to the freeholder for the lease extension to be between £9,500 and £11,000 not including legals.
Last March we were contacted by Ms Bethan Flores , who acquired a ground floor flat in Hollywood in November 1997. The question was if we could shed any light on how much (approximately) premium would likely be to prolong the lease by 90 years. Comparative homes in Hollywood with an extended lease were worth £176,200. The mid-range amount of ground rent was £65 collected per annum. The lease ended on 2 July 2082. Given that there were 56 years left we estimated the compensation to the freeholder for the lease extension to be between £29,500 and £34,000 plus expenses.