It’s a harsh certainty that a Mayfair residential lease is a deteriorating asset. The lease value drops in proportion to its lease length. The extent of this is taken for granted in the first few years due to the loss of value being disguised by increases in the Mayfair property prices.Once your lease nears 85ish years, you should 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 slips lower than 80 years - otherwise a higher premium will be due. Most leasehold owners in Mayfair will be able to extend under the legislation; however a conveyancing solicitor will be able to clarify if you qualify for an extension. In some cases you may not be entitled. There are also strict deadlines and procedures to be adhered to once the process has commenced and you will need to be guided by your conveyancing solicitor for the duration of the formalities.
It is generally considered that a residential leasehold with over 100 years remaining is worth roughly the equivalent as a freehold. Where an further ninety years added to any lease with more than 45 years remaining, the property will be equivalent in value to a freehold for decades to come.
| 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. |
| 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 |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The conveyancers that we work with undertake Mayfair 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.
Last October Toby, started to get close to the 80-year mark with the lease on his garden flat in Mayfair. Having bought his home 18 years previously, the lease term was of minimal concern. Fortunately, he became aware that he would imminently be paying way over the odds for Extending the lease. Toby arranged for a lease extension just in the nick of time in August. Toby and the landlord eventually settled on a premium of £5,500 . If he not met the deadline, the sum would have gone up by a minimum £875.
In 2009 we were contacted by Mr and Mrs. M Flores who, having owned a basement flat in Mayfair in March 1997. We are asked if we could approximate the price would likely be for a 90 year extension to my lease. Identical flats in Mayfair with 100 year plus lease were valued around £227,800. The mid-range ground rent payable was £45 collected every twelve months. The lease expired in 2090. Taking into account 65 years left we calculated the compensation to the freeholder to extend the lease to be within £13,300 and £15,400 not including fees.
An example of a Lease Extension matter before the tribunal for a Mayfair property is Flat 1 3 Upper Belgrave Street in December 2010. The Tribunal determined that the price payablefor the Lease extension in respect of the subject premises was £2,202,007 This case affected 1 flat. The unexpired lease term was 21 years.