Old Town leases on residential properties are gradually decreasing in value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of the lease gets more expensive. It is the case that most Old Town tenants have the right to extend their lease by an additional 90 years under the 1993 Leasehold Reform Act. Where you are a leasehold owner in Old Town you would be well advised to see if your lease has between 70 and 90 years left. There are good reasons why a Old Town leaseholder with a lease having around eighty years unexpired should take action to make sure that a lease extension is actioned without delay
Leasehold properties in Old Town with in excess of 100 years outstanding on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such circumstances there is often little upside in buying the reversionary interest unless savings on ground rent and estate charges merit it.
| Lender | Requirement |
|---|---|
| Birmingham Midshires | |
| Godiva Mortgages | |
| Halifax | |
| Santander | |
| Virgin |
The conveyancing solicitors that we work with handle Old Town 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.
Samuel was the the leasehold proprietor of a conversion apartment in Old Town being marketed with a lease of just over 59 years remaining. Samuel on an informal basis approached his freeholder being a well known Bristol-based freehold company for a lease extension. The landlord indicated a willingness to extend the lease to 125 years subject to a new rent at the outset set at £150 per annum and doubled every twenty five years thereafter. Ordinarily, ground rent would not be payable on a lease extension were Samuel to invoke his statutory right. Samuel obtained expert advice and secured satisfactory resolution informally and ending up with a market value flat.
Dr R Rogers was assigned a lease of a garden flat in Old Town in August 2003. The dilemma was if we could approximate the premium would be for a ninety year lease extension. Comparative residencies in Old Town with 100 year plus lease were valued about £275,000. The mid-range ground rent payable was £45 billed quarterly. The lease concluded on 27 February 2095. Taking into account 69 years as a residual term we estimated the compensation to the landlord to extend the lease to be within £12,400 and £14,200 exclusive of fees.
Last month we were called by Mr and Mrs. J White , who purchased a first floor apartment in Old Town in July 1995. The dilemma was if we could shed any light on how much (roughly) price would be to extend the lease by a further 90 years. Comparative properties in Old Town with an extended lease were valued around £216,000. The mid-range ground rent payable was £60 collected annually. The lease terminated in 2084. Given that there were 58 years left we calculated the compensation to the freeholder for the lease extension to be between £28,500 and £33,000 exclusive of expenses.