For anyone whose St John's Wood property is held on a long lease, our message is clear – if you do nothing, your property will ultimately revert to your landlord, leaving you empty-handed. The shorter the lease the less it is worth and the more it will cost to obtain a lease extension.
It is generally accepted that a property with more than one hundred years unexpired lease term is worth approximately the same as a freehold. Where an further ninety years added to all but the shortest lease, the property will be equivalent in value to a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Halifax | 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. |
| 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. |
Retaining our service gives you better control over the value of your St John's Wood leasehold, as your property will be more valuable and marketable in terms of lease length should you decide to sell. The conveyancing solicitors that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Half a year ago Seth, came precariously close to the eighty-year mark with the lease on his basement apartment in St John's Wood. In buying his flat 18 years previously, the unexpired term was of little bearing. Luckily, it dawned on him that he would soon be paying an inflated amount for a lease extension. Seth arranged for a lease extension at the eleventh hour last July. Seth and the freeholder in the end agreed on sum of £6,000 . If he failed to meet the deadline, the amount would have increased by at least £1,150.
In 2010 we were contacted by Dr Molly Dupont who, having purchased a first floor flat in St John's Wood in July 1998. The dilemma was if we could shed any light on how much (roughly) compensation to the landlord would likely be to extend the lease by ninety years. Comparative premises in St John's Wood with a long lease were worth £275,000. The average amount of ground rent was £55 invoiced annually. The lease came to a finish on 28 March 2102. Having 76 years unexpired we calculated the premium to the freeholder to extend the lease to be within £9,500 and £11,000 plus fees.
An example of a Lease Extension case for a St John's Wood property is Garden Flat 195 Goldhurst Terrace in May 2012. The Tribunal held in accordance with section 48 and Schedule 13 of the Leasehold Reform, Housing and Urban Development Act 1993 that the premium for the extended lease should be £60,855.00. This case affected 1 flat. The unexpired term as at the valuation date was 60.16 years.