The basic rule is, all other things holding equal, the shorter the lease the more costly the premium. Qualifying leaseholders in St James can extend the lease for an additional ninety years under Leasehold Reform legislation. Do give careful consideration before delaying your St James lease extension. Putting off the costs now simply escalates the amount you will ultimately be required to pay to extend the lease.
It is conventional wisdom that a residential leasehold with more than one hundred years remaining is worth approximately the same as a freehold. Where an further 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 |
|---|---|
| Accord Mortgages | 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. |
| 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; |
| 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. |
| Godiva Mortgages | 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 |
The conveyancing solicitors that we work with procure St James 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 conveyancer we work with provide it.
Off the back of lengthy discussions with the freeholder of her studio flat in St James, Phoebe commenced the lease extension process just as the lease was coming close to the crucial eighty-year mark. The lease extension completed in August 2008. The landlord’s costs were kept to an absolute minimum.
Mr M Bell acquired a one bedroom flat in St James in April 1998. We are asked if we could estimate the price could be to extend the lease by ninety years. Identical premises in St James with an extended lease were worth £205,000. The mid-range amount of ground rent was £50 invoiced monthly. The lease ran out on 14 March 2103. Considering the 78 years outstanding we approximated the compensation to the landlord to extend the lease to be between £7,600 and £8,800 exclusive of professional charges.
An example of a Lease Extension case for a St James premises is Flats 12A & 19, Evelyn Mansions Carlisle Place in June 2009. The Tribunal held that the price to be paid for the new lease of Flat 12A is £168,824, For the other flat the price was set at £169,110 This case affected 2 flats. The unexpired lease term was 56 years.