Smithfield leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of the lease becomes more expensive. Most owners of residential leasehold property in Smithfield enjoy rights under legislation to extend the terms of their leases. Where you are a leasehold owner in Smithfield you really ought to investigate if your lease has between seventy and ninety years left. There are compelling reasons why a Smithfield leaseholder with a lease having around 80 years unexpired should take action to make sure that a lease extension is actioned without delay
Leasehold premises in Smithfield with in excess of one hundred years left on the lease are often referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such circumstances there is often little to be gained by buying the freehold unless savings on ground rent and service charges merit it.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 75 years plus the term of the mortgage at the outset of the mortgage. |
The lawyers that we work with procure Smithfield 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.
Two years ago Blake, started to get near to the 80-year mark with the lease on his two bedroom flat in Smithfield. Having bought his property two decades ago, the unexpired term was of minimal bearing. by good luck, he recognised he would imminently be paying an escalated premium for Extending the lease. Blake was able to extend his lease just under the wire last April. Blake and the landlord eventually settled on the final figure of £6,000 . If he not met the deadline, the amount would have gone up by at least £1,150.
In 2009 we were e-mailed by Mr and Mrs. Y Peterson who, having purchased a purpose-built flat in Smithfield in April 2012. We are asked if we could estimate the premium would be to prolong the lease by a further 90 years. Similar flats in Smithfield with 100 year plus lease were valued about £257,800. The mid-range amount of ground rent was £65 invoiced per annum. The lease lapsed on 12 September 2091. Having 65 years remaining we calculated the compensation to the landlord for the lease extension to be between £18,100 and £20,800 exclusive of legals.
Last Christmas we were called by Ms F Moreau , who bought a basement apartment in Smithfield in March 1998. We are asked if we could approximate the price could be to extend the lease by an additional years. Comparable homes in Smithfield with an extended lease were worth £191,400. The mid-range amount of ground rent was £55 collected every twelve months. The lease lapsed in 2080. Given that there were 54 years as a residual term we estimated the premium to the freeholder for the lease extension to be within £34,200 and £39,600 plus expenses.