St Pancras leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of your lease gets more expensive. Legislation has been in place for sometime now allowing qualifying St Pancras residential leaseholders to extend the terms of long leases. If you are a leasehold owner in St Pancras you really ought to see if your lease has between 70 and 90 years remaining. In particular once the remaining lease term slips under 80 years, the premium due on any lease extension sharply increases as an element of the premium you will incur is what is known as a marriage value
Leasehold premises in St Pancras with over one hundred years remaining on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such circumstances there is often little upside in purchasing the freehold unless savings on ground rent and service charges merit it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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; |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| 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 freeholder in St Pancras,the lease extension experts that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with St Pancras valuers.
Last October Edward, started to get near to the eighty-year threshold with the lease on his garden flat in St Pancras. In buying his home two decades ago, the length of the lease was of little relevance. Luckily, he realised he would soon be paying way over the odds for a lease extension. Edward arranged for a lease extension just under the wire last January. Edward and the freeholder subsequently agreed on the final figure of £6,000 . If the lease had gone lower than eighty years, the price would have escalated by a minimum £950.
In 2012 we were called by Mr and Mrs. A Carter who, having bought a one bedroom flat in St Pancras in March 1999. The dilemma was if we could estimate the price would be for a 90 year lease extension. Similar residencies in St Pancras with an extended lease were valued around £285,000. The mid-range ground rent payable was £45 collected monthly. The lease ended on 5 July 2098. Having 72 years remaining we calculated the compensation to the landlord for the lease extension to be within £12,400 and £14,200 not including expenses.
An example of a Lease Extension case for a St Pancras residence is Flat 89 Trinity Court Grays Inn Road in February 2013. the Tribunal found that the premium to be paid by the tenant on the grant of a new lease, in accordance with section 56 and Schedule 13 to the Leasehold Reform, Housing and Urban Development Act 1993 should be £36,229. This case was in relation to 1 flat. The unexpired term as at the valuation date was 66.8 years.