Piccadilly leases on residential properties are gradually diminishing 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 Piccadilly tenants have the right to extend their lease by an additional ninety years in accordance with the 1993 Leasehold Reform Act. If you are a leasehold owner in Piccadilly you should check if your lease has between 70 and 90 years remaining. In particular once the remaining lease term slips under eighty years, the cost of any lease extension sharply increases as an element of the premium you will incur is what is known as a marriage value
It is conventional wisdom that a property with over 100 years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional ninety years added to any lease with more than 30 years remaining, the premises will be worth the same as a freehold for many years in the future.
| 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Using our service will provide you enhanced control over the value of your Piccadilly leasehold, as your property will be more valuable and saleable in respect of lease length should you want 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.
Half a year ago Riley, started to get close to the eighty-year threshold with the lease on his basement flat in Piccadilly. In buying his property 19 years ago, the length of the lease was of minimal relevance. Luckily, he recognised he needed to take steps soon on Extending the lease. Riley extended the lease just under the wire last July. Riley and the freeholder via the managing agents subsequently agreed on the final figure of £5,000 . If the lease had descended lower than eighty years, the amount would have escalated by a minimum £1,050.
Dr P Torres bought a purpose-built apartment in Piccadilly in June 2004. We are asked if we could shed any light on how much (approximately) compensation to the landlord could be to prolong the lease by 90 years. Similar homes in Piccadilly with an extended lease were worth £285,000. The mid-range amount of ground rent was £55 billed annually. The lease elapsed on 11 April 2105. Taking into account 80 years remaining we approximated the compensation to the landlord for the lease extension to be between £12,400 and £14,200 plus costs.
An example of a Lease Extension case for a Piccadilly flat 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 was in relation to 1 flat. The number of years remaining on the existing lease(s) was 21 years.