When it comes to domestic leasehold premises in Smithfield, you are actually buying an entitlement to reside in a property for a set period of time. Modern flat leases typically tend to be for 99 years or 125. Many leasehold owners become complacent as this seems like a lengthy period of time, you may think about extending the lease sooner rather than later. The general rule is that the shorter the lease is the cost of extending the lease becomes disproportionately greater especially when there are fewer than 80 years remaining. Residents in Smithfield with a lease approaching 81 years remaining should seriously think of extending it sooner rather than later. When a lease has under eighty years left, under the relevant legislation the freeholder can calculate and demand a larger amount, assessed on a technical calculation, known as “marriage value” which is due.
It is conventional wisdom that a property with more than 100 years unexpired lease term is worth approximately the same as a freehold. Where an additional ninety years added to all but the shortest lease, the premises will be worth the same as a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| 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. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
| 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. |
Irrespective of whether you are a tenant or a landlord in Smithfield,the lease extension solicitors that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Smithfield valuers.
Ryan owned a high value apartment in Smithfield on the market with a lease of fraction over sixty years left. Ryan on an informal basis approached his freeholder being a well known Manchester-based freehold company for a lease extension. The landlord indicated a willingness to extend the lease to 125 years subject to a rise in the rent to £125 annually. No ground rent would be due on a lease extension were Ryan to exercise his statutory right. Ryan procured expert advice and secured an acceptable resolution without resorting to tribunal and ending up with a market value flat.
In 2012 we were called by Dr K Ali who, having completed a first floor apartment in Smithfield in August 2003. The question was if we could approximate the price would likely be to prolong the lease by a further 90 years. Comparable residencies in Smithfield with 100 year plus lease were in the region of £189,000. The mid-range amount of ground rent was £55 billed yearly. The lease came to a finish in 2079. Considering the 53 years as a residual term we approximated the compensation to the freeholder for the lease extension to be between £28,500 and £33,000 plus expenses.
Last month we were e-mailed by Mr and Mrs. C François , who bought a studio apartment in Smithfield in September 2000. We are asked if we could estimate the price would likely be for a 90 year lease extension. Identical residencies in Smithfield with a long lease were valued around £290,000. The mid-range ground rent payable was £45 collected monthly. The lease expired in 2099. Having 73 years left we estimated the premium to the freeholder for the lease extension to be between £9,500 and £11,000 not including legals.