There is no doubt about it a leasehold property in North West London is a wasting asset as a result of the shortening lease. Where the lease has, beyond 99 years to run then this decrease may be of little impact however there will become a stage when a lease has under than eighty years remaining as part of the premium you will incur is what is known as a marriage value. This could increase markedly the cost. It is the main reason why you should extend the lease sooner rather than later. Many flat owners in North West London will qualify for this right; that being said a lawyer can advise whether you are eligible for a lease extension. In limited situations you may not qualify, the most common reason being that you have not been the owner of the property for two years.
It is conventional wisdom that a property with more than one hundred years unexpired lease term is worth roughly the same as a freehold. Where an additional ninety years added to any lease with more than 45 years left, the residence will be worth the same as a freehold for many years ahead.
| 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
Retaining our service gives you enhanced control over the value of your North West London leasehold, as your property will be more valuable and saleable in terms of 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.
Eli owned a studio apartment in North West London on the market with a lease of just over 61 years remaining. Eli on an informal basis contacted his freeholder a well known Bristol-based freehold company for a lease extension. The freeholder was prepared to grant an extension on non-statutory terms taking the lease to 125 years subject to a new rent at the outset set at £200 per annum and increase every 25 years thereafter. No ground rent would be due on a lease extension were Eli to invoke his statutory right. Eli obtained expert legal guidance and was able to make a more informed decision and deal with the matter and ending up with a market value flat.
In 2011 we were e-mailed by Mr H Young who, having moved into a one bedroom apartment in North West London in November 2006. We are asked if we could shed any light on how much (approximately) premium would be to prolong the lease by an additional years. Identical homes in North West London with 100 year plus lease were worth £210,600. The average amount of ground rent was £45 billed quarterly. The lease terminated in 2088. Having 62 years remaining we calculated the premium to the landlord for the lease extension to be within £18,100 and £20,800 plus costs.
In 2014 we were phoned by Mr and Mrs. T Fournier who, having took over the lease of a ground floor apartment in North West London in January 2007. The question was if we could approximate the compensation to the landlord would be for a 90 year lease extension. Similar homes in North West London with a long lease were valued about £265,000. The mid-range ground rent payable was £50 collected annually. The lease expiry date was in 2099. Taking into account 73 years unexpired we estimated the premium to the landlord for the lease extension to be within £9,500 and £11,000 exclusive of fees.