Owning a apartment usually means owning a lease of the property, which has a finite term of years. The lease will normally be granted for a set period of time , ordinarily 99 or 125 years, although we have seen longer and shorter terms in Piccadilly. Inevitably, the period of lease left reduces as time goes by. This may pass by relatively unnoticed when the residence has to be disposed of or refinanced. The fewer the years remaining the less it is worth and the more expensive it will be to procure a lease extension. Eligible long lease owners in Piccadilly have the legal entitlement to extend the lease for an additional 90 years under legislation. Do give due consideration before putting off your Piccadilly lease extension. Putting off that expense now likely increases the price you will ultimately have to pay to extend your lease
Leasehold properties in Piccadilly with more than 100 years remaining on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your property. In such circumstances there is often little upside in purchasing the freehold unless savings on ground rent and estate charges justify it.
| Lender | Requirement |
|---|---|
| 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| Yorkshire 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. |
The conveyancers that we work with procure Piccadilly 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.
Oliver owned a high value flat in Piccadilly being marketed with a lease of fraction over fifty eight years unexpired. Oliver on an informal basis spoke with his freeholder a well known Bristol-based freehold company and enquired on a premium to extend the lease. The landlord was keen to agree 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. Ordinarily, ground rent would not be payable on a lease extension were Oliver to invoke his statutory right. Oliver obtained expert legal guidance and secured an acceptable resolution informally and readily saleable.
In 2013 we were e-mailed by Ms O Dupont who, having bought a purpose-built apartment in Piccadilly in August 1998. We are asked if we could approximate the premium would likely be for a 90 year lease extension. Similar properties in Piccadilly with an extended lease were in the region of £203,200. The average ground rent payable was £65 billed yearly. The lease concluded in 2086. Given that there were 61 years outstanding we estimated the compensation to the landlord for the lease extension to be between £20,000 and £23,000 exclusive of professional charges.
An example of a Lease Extension matter before the tribunal for a Piccadilly property 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 unexpired term was 21 years.