With a long leasehold property in The Park, you are actually buying an entitlement to live in a property for a set period of time. Modern flat leases are usually granted for 99 years or 125. Even though this may appear like a long period of time, you should think about extending the lease sooner rather than later. The general rule is that the shorter the lease is the cost of extending the lease increases markedly especially when there are less than eighty years left. Residents in The Park with a lease drawing near to 81 years left should seriously consider extending it without delay. When a lease has fewer than eighty years outstanding, under the current statute the landlord can calculate and demand a larger premium, assessed on a technical computation, strangely termed as “marriage value” which is payable.
Leasehold premises in The Park with more than one hundred years outstanding on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such situations there is often little upside in purchasing the reversionary interest unless savings on ground rent and service charges justify it.
| Lender | Requirement |
|---|---|
| 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; |
| 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 |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The conveyancers that we work with undertake The Park 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 conveyancing solicitor we work with provide it.
In the wake of eight months of lengthy discussions with the landlord of her garden apartment in The Park, Alisha commenced the lease extension process as the 80 year mark was fast approaching. The lease extension completed in September 2012. The freeholder’s costs were kept to an absolute minimum.
Dr Natasha Hill moved into a basement apartment in The Park in March 1995. We are asked if we could shed any light on how much (roughly) compensation to the landlord could be to extend the lease by an additional years. Identical premises in The Park with an extended lease were worth £205,000. The mid-range ground rent payable was £50 billed annually. The lease concluded in 2105. Given that there were 79 years remaining we approximated the compensation to the freeholder for the lease extension to be within £8,600 and £9,800 exclusive of professional charges.
Last Christmas we were phoned by Mr and Mrs. S García , who owned a basement flat in The Park in July 1999. The question was if we could shed any light on how much (approximately) compensation to the landlord would likely be to prolong the lease by 90 years. Comparative flats in The Park with an extended lease were valued about £275,000. The mid-range amount of ground rent was £65 billed quarterly. The lease ended in 2094. Taking into account 68 years unexpired we estimated the compensation to the landlord to extend the lease to be within £12,400 and £14,200 plus professional charges.