The market value of a leasehold property in North London is impacted by how long the lease has remaining. If it is near to or less than eighty years you should envisage difficulties on re-sale, so it is advisable to arrange for the lease to be extended prior to purchasing. It is ideal to start the lease extension process when a lease still has 82 years unexpired so that all matters can be concluded well before the 80 year mark. Current legislation enables North London qualifying lessees to a 90 year extension added to their remaining lease term (ie if your lease has 50 years left the statutory lease extension will provide a new term of 140 years). The purpose of the valuation is to determine the sum payable by the lessee to the freeholder for the purchase of the lease extension.
Leasehold premises in North London with in excess of one hundred years remaining on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such situations there is often little to be gained by buying the freehold unless savings on ground rent and estate charges merit it.
| 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. |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must also be not less than 75 years at the outset of the mortgage. |
Engaging our service will provide you increased control over the value of your North London leasehold, as your property will be more valuable and marketable in relation to the lease length should you wish to sell. The lawyers that we work with have a in-depth market knowledge handling many hundreds of lease extensions or freehold purchase transactions.
Harvey owned a high value flat in North London on the market with a lease of just over sixty years left. Harvey on an informal basis approached his landlord being a well known London-based freehold company and enquired on a premium to extend the lease. The landlord indicated a willingness to extend the lease to 125 years subject to a new rent initially set at £150 per annum and doubled every 25 years thereafter. Ordinarily, ground rent would not be payable on a lease extension were Harvey to invoke his statutory right. Harvey obtained expert legal guidance and was able to make an informed decision and deal with the matter and ending up with a market value flat.
In 2014 we were called by Dr Sophie Clarke who, having bought a garden apartment in North London in November 2012. We are asked if we could shed any light on how much (approximately) compensation to the landlord would likely be to extend the lease by ninety years. Identical flats in North London with an extended lease were in the region of £181,600. The average ground rent payable was £55 invoiced every twelve months. The lease ran out in 2078. Taking into account 52 years remaining we estimated the compensation to the freeholder to extend the lease to be within £30,400 and £35,200 exclusive of fees.
An example of a Freehold Enfranchisement matter before the tribunal for a North London premises is 20 Avonwick Road in July 2013. The Tribunal was dealing with an application under Section 26 of the Leasehold Reform Housing and Urban Development Act 1993 for a determination of the freehold value of the property. It was concluded that the price to be paid was Fifteen Thousand Nine Hundred and Seventy (£15,970) divided as to £8,200 for Flat 20 and £7,770 for Flat 20A This case related to 1 flat. The remaining number of years on the lease was 73.26 years.