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Why you should commence your Westminster lease extension


Top reasons for lease extension now:

A Westminster leasehold property depreciates with the years remaining on the lease.

The market value of a leasehold property in Westminster is impacted by how long the lease has left to run. If it is near to or less than eighty years you should expect difficulties on re-sale, so it is recommended to arrange for the lease to be extended prior to buying. Ideally one should start the process of extending the lease is when the lease still has 82 years remaining so that all matters can be finalised prior to the 80 year threshold. Current legislation entitles Westminster qualifying lessees to acquire a new lease which will be for the balance of the existing lease plus an additional term of ninety years. The reason of the valuation is to determine the premium payable by the lessee to the freeholder for the purchase of the lease extension.

Westminster property with a lease extension is almost the same value as a freehold

Leasehold premises in Westminster with more than 100 years unexpired on the lease are sometimes regarded as a ‘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 buying the reversionary interest unless savings on ground rent and service charges warrant it.

Lending institutions may not lend on a short lease

Banks and building societies are distinct in their lending requirements. Some draw the line at 75 years remaining on the lease; others may be content with anything with more than seventy years. Below sixty years, it may be impossible to obtain a mortgage in the first place.

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 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.
Halifax Minimum 70 years from the date 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.

Get in touch with one of our Westminster lease extension solicitors or enfranchisement solicitors

Engaging our service will provide you better control over the value of your Westminster leasehold, as your property will be more valuable and saleable in respect of lease length should you wish to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.

Westminster Lease Extension Case Summaries:

Chloe, Westminster, London,

In the wake of 9 months of lengthy correspondence with the freeholder of her leasehold flat in Westminster, Chloe started the lease extension process as the 80 year threshold was quickly nearing. The lease extension was concluded in January 2014. The landlord’s costs were kept to an absolute minimum.

Westminster case:

In 2011 we were phoned by Dr Kyle Rogers who, having owned a ground floor flat in Westminster in August 2001. We are asked if we could shed any light on how much (approximately) premium would be for a ninety year extension to my lease. Comparative flats in Westminster with an extended lease were worth £168,800. The mid-range amount of ground rent was £60 invoiced quarterly. The lease end date was in 2080. Having 55 years outstanding we approximated the premium to the landlord for the lease extension to be between £31,400 and £36,200 exclusive of legals.

Decision in Westminster

An example of a Lease Extension decision for a Westminster property is Flats 12A & 19, Evelyn Mansions Carlisle Place in June 2009. The Tribunal held that the price to be paid for the new lease of Flat 12A is £168,824, For the other flat the price was set at £169,110 This case related to 2 flats. The number of years remaining on the existing lease(s) was 56 years.