It’s a harsh certainty that a St Luke's residential lease is a wasting asset. The lease value reduces in proportion to its lease length. The extent of this is taken for granted in the first few years due to the reduction being disguised by increases in the St Luke's property prices.Where your lease has approximately ninety years left, you should start considering a lease extension. If the number of years remaining dips below 80 years, you will end up paying half of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of extra value that a lease extension will add the property The majority of flat owners in St Luke's will be able to extend under the legislation; however a conveyancing solicitor should be able to confirm if you are eligibility. In some situations you may not be entitled. There are also strict deadlines and procedures to be adhered to once the process is instigated and you will need to be guided by your conveyancing solicitor throughout the process.
It is generally considered that a residential leasehold with in excess of 100 years unexpired lease term is worth roughly the same as a freehold. Where an additional ninety years added to any lease with more than 35 years unexpired, the residence will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must also be not less than 75 years 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. |
Using our service will provide you enhanced control over the value of your St Luke's leasehold, as your property will be more valuable and saleable in terms of lease length should you wish 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.
Last October Sam, started to get near to the eighty-year threshold with the lease on his two bedroom flat in St Luke's. In buying his flat two decades ago, the lease term was of little importance. Thankfully, he realised he would imminently be paying an escalated premium for Extending the lease. Sam extended the lease just under the wire in January. Sam and the landlord subsequently agreed on an amount of £5,000 . If the lease had dipped lower than eighty years, the amount would have become more exhorbitant by a minimum £850.
In 2010 we were phoned by Mr and Mrs. H Alexander who, having moved into a recently refurbished flat in St Luke's in April 2010. The question was if we could approximate the compensation to the landlord would be to prolong the lease by an additional years. Similar homes in St Luke's with 100 year plus lease were worth £186,000. The mid-range ground rent payable was £65 billed annually. The lease expired on 8 July 2083. Given that there were 58 years as a residual term we estimated the premium to the landlord for the lease extension to be within £24,700 and £28,600 exclusive of legals.
An example of a Lease Extension matter before the tribunal for a St Luke's premises is 137 & 139 Haberdasher Street in December 2013. The Tribunal determines 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 for each Property should be £12,350.00. This case related to 2 flats. The number of years remaining on the existing lease(s) was 72.39 years.