It’s a harsh truth that a Marylebone residential lease is a deteriorating asset. The lease value reduces in proportion to its lease length. The extent of this is taken for granted in the first few years due to the depreciation being disguised by increases in the Marylebone property prices.Once your lease nears 85ish years, you need to start thinking about a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease falls lower than 80 years - otherwise a higher premium will be payable. Most leasehold owners in Marylebone will be able to extend under the legislation; however a conveyancing solicitor will be able to confirm if you are eligibility. In some situations you may not qualify. There are also strict timeframes and procedures to follow once the process is instigated and you will need to be guided by your conveyancer throughout the formalities.
It is generally accepted that a property with more than one hundred years unexpired lease term is worth approximately the equivalent as a freehold. Where an further ninety years added to any lease with more than 45 years unexpired, the residence will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Bank of Scotland | 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. |
| Coventry Building Society | 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
Using our service gives you better control over the value of your Marylebone leasehold, as your property will be more valuable and saleable in relation to the lease length should you decide to sell. The conveyancing solicitors that we work with have a in-depth market knowledge handling many hundreds of lease extensions or freehold purchase transactions.
Half a year ago Nathan, started to get close to the 80-year threshold with the lease on his two bedroom flat in Marylebone. Having purchased his home twenty years ago, the length of the lease was of minimal importance. Luckily, he became aware that he would imminently be paying way over the odds for a lease extension. Nathan arranged for a lease extension at the eleventh hour last August. Nathan and the freeholder subsequently agreed on sum of £5,000 . If the lease had dropped below 80 years, the premium would have escalated by a minimum £1,075.
Last Summer we were e-mailed by Mrs Sophie Jones , who owned a ground floor flat in Marylebone in November 2009. The question was if we could estimate the premium would be for a 90 year extension to my lease. Comparable residencies in Marylebone with an extended lease were in the region of £200,000. The average ground rent payable was £50 collected quarterly. The lease came to a finish on 7 March 2103. Taking into account 77 years as a residual term we estimated the premium to the landlord to extend the lease to be within £8,600 and £9,800 plus professional charges.
An example of a Lease Extension matter before the tribunal for a Marylebone premises is Flats 37 & 39 88/90 Portland Place in December 2010. The Tribunal determined that the premium payable for the lease extensions in respect of these two flats is as follows:- For Flat 37, the sum of £385,230.00 For Flat 39, the sum of £436,780.00 This case related to 2 flats. The unexpired term was 24.02 years.