The basic rule is, all other things holding equal, the shorter the lease the more costly the premium. Qualifying leaseholders in Smithfield may extend the lease for a further ninety years under statute. Do think carefully before delaying your Smithfield lease extension. Shelving the costs today simply increases the price you will ultimately have to pay to extend the lease.
Leasehold properties in Smithfield with in excess of 100 years left on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your property. In such situations there is often little upside in purchasing the freehold unless savings on ground rent and estate charges warrant 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; |
| 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. |
| 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 |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| 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 gives you enhanced control over the value of your Smithfield leasehold, as your property will be more valuable and saleable in relation to the 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.
Joshua owned a 2 bedroom flat in Smithfield on the market with a lease of just over 72 years remaining. Joshua on an informal basis spoke with his freeholder being a well known London-based freehold company for a lease extension. The landlord was keen to grant an extension on non-statutory terms taking the lease to 125 years subject to a new rent initially set at £150 per annum and increase every twenty five years thereafter. No ground rent would be payable on a lease extension were Joshua to exercise his statutory right. Joshua obtained expert legal guidance and secured satisfactory resolution without going to tribunal and readily saleable.
In 2010 we were contacted by Mr and Mrs. M Allen who, having owned a basement apartment in Smithfield in October 2006. The dilemma was if we could approximate the premium would be to prolong the lease by 90 years. Comparable premises in Smithfield with a long lease were worth £223,400. The average amount of ground rent was £60 collected yearly. The lease ended in 2085. Given that there were 59 years outstanding we estimated the compensation to the freeholder to extend the lease to be between £27,600 and £31,800 plus costs.
In 2011 we were called by Mr and Mrs. Y Khan who, having took over the lease of a basement apartment in Smithfield in August 2000. We are asked if we could approximate the compensation to the landlord would be for a 90 year lease extension. Comparable flats in Smithfield with a long lease were worth £205,000. The mid-range ground rent payable was £50 invoiced yearly. The lease came to a finish on 27 November 2105. Considering the 79 years left we approximated the premium to the landlord for the lease extension to be within £8,600 and £9,800 plus expenses.