The rule of thumb is, all other things holding equal, the shorter the lease the more costly the premium. Qualifying leaseholders in Paddington may extend the lease for an additional ninety years in accordance with the 1993 Leasehold Reform Act. Please give careful consideration before delaying your Paddington lease extension. Postponing the costs now simply escalates the premium you will eventually have to pay for a lease extension.
It is conventional wisdom that a property with over one hundred years unexpired lease term is worth roughly the same as a freehold. Where an further ninety years added to any lease with more than 45 years left, the premises will be equivalent in value to 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; |
| 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. |
| 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. |
| 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 |
Using our service will provide you increased control over the value of your Paddington leasehold, as your property will be more valuable and saleable in terms of lease length should you decide to sell. The conveyancers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Kai was the the leasehold owner of a conversion apartment in Paddington being marketed with a lease of a little over 72 years remaining. Kai informally approached his landlord a well known London-based freehold company and enquired on a premium to extend the lease. The landlord was prepared to agree an extension on non-statutory terms taking the lease to 125 years subject to a new rent initially set at £150 per annum and doubled every twenty five years thereafter. No ground rent would be payable on a lease extension were Kai to exercise his statutory right. Kai 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 2013 we were contacted by Dr N Davis who, having owned a garden apartment in Paddington in August 2002. The dilemma was if we could approximate the price could be for a ninety year lease extension. Comparable flats in Paddington with a long lease were worth £176,200. The average ground rent payable was £65 invoiced annually. The lease finished in 2081. Given that there were 56 years left we calculated the compensation to the freeholder for the lease extension to be within £29,500 and £34,000 plus costs.
An example of a Lease Extension matter before the tribunal for a Paddington 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 was in relation to 2 flats. The number of years remaining on the existing lease(s) was 24.02 years.