Howden leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of your lease becomes more expensive. It is the case that most Howden tenants have the right to extend their lease by an additional ninety years in accordance with the 1993 Leasehold Reform Act. Where you are a leasehold owner in Howden you would be well advised to check if your lease has between seventy and ninety years left. In particular once the remaining lease term slips under 80 years, the cost of any lease extension increases dramatically as an element of the premium you pay is what is known as a marriage value
It is conventional wisdom that a property with more than one hundred years remaining is worth roughly the equivalent as a freehold. Where an additional 90 years added to any lease with more than 45 years remaining, the property will be worth the same as a freehold for decades to come.
| 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. |
| Lloyds TSB Scotland | 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 |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The lawyers that we work with undertake Howden 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 lawyer we work with provide it.
Gabriel was the the leasehold owner of a conversion flat in Howden being marketed with a lease of just over 59 years remaining. Gabriel on an informal basis approached his landlord being a well known Manchester-based freehold company for a lease extension. The landlord was prepared to give an extension on non-statutory terms taking the lease to 125 years subject to a new rent initially set at £200 per annum and increase every twenty five years thereafter. No ground rent would be due on a lease extension were Gabriel to invoke his statutory right. Gabriel obtained expert legal guidance and was able to make an informed judgement and deal with the matter and ending up with a market value flat.
Dr Alexander Ali purchased a studio flat in Howden in May 2011. The question was if we could shed any light on how much (roughly) compensation to the landlord would likely be to prolong the lease by an additional years. Identical homes in Howden with 100 year plus lease were valued about £255,000. The mid-range amount of ground rent was £50 billed quarterly. The lease ended in 2097. Given that there were 71 years remaining we calculated the compensation to the freeholder for the lease extension to be within £9,500 and £11,000 exclusive of professional charges.
Last November we were phoned by Mr F Stewart , who moved into a studio apartment in Howden in March 1998. We are asked if we could shed any light on how much (roughly) compensation to the landlord could be for a 90 year extension to my lease. Comparable premises in Howden with an extended lease were valued around £249,200. The mid-range ground rent payable was £60 collected per annum. The lease finished on 13 November 2077. Given that there were 51 years outstanding we approximated the compensation to the freeholder to extend the lease to be within £42,800 and £49,400 plus legals.