The value of Swiss Cottage leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The cost of extending the lease can escalate significantly once the unexpired lease term is below than eighty years
It is conventional wisdom that a residential leasehold with more than one hundred years unexpired lease term is worth approximately the same as a freehold. Where an additional ninety years added to all but the shortest lease, the premises will be equivalent in value to a freehold for decades to come.
| 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The conveyancing solicitors that we work with procure Swiss Cottage 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 lawyer we work with provide it.
Last October Jackson, came dangerously close to the 80-year threshold with the lease on his leasehold apartment in Swiss Cottage. Having purchased his home 19 years ago, the unexpired term was of minimal concern. by good luck, he recognised he would imminently be paying an escalated premium for Extending the lease. Jackson arranged for a lease extension just ahead of time in June. Jackson and the freeholder via the management company subsequently settled on sum of £6,000 . If he failed to meet the deadline, the premium would have become more exhorbitant by a minimum £925.
In 2010 we were contacted by Ms Abigail Nguyen who, having completed a ground floor apartment in Swiss Cottage in March 2010. We are asked if we could approximate the premium would likely be to prolong the lease by ninety years. Similar properties in Swiss Cottage with an extended lease were in the region of £227,800. The mid-range amount of ground rent was £45 billed annually. The lease lapsed on 16 May 2090. Having 65 years outstanding we calculated the premium to the freeholder for the lease extension to be within £13,300 and £15,400 not including costs.
An example of a Lease Extension matter before the tribunal for a Swiss Cottage residence is First Floor Flat 20 Fitzjohns Avenue in July 2014. the Tribunal decided that the premiums to be paid for new leases in respect of the Raised Ground Floor Flat and the First Floor Flat were to be calculated as: Raised Ground Floor: £765,175.14 First Floor: £601,617.77 This case related to 2 flats. The unexpired residue of the current lease was 16.83 and 16.43.