The only way is down when it comes to Westminster lease terms. Westminster flats that have a residual term shorter than 80 years will drop in market price at a rapid rate, and the cost of extending your lease will increase.
It is generally considered that a residential leasehold with over 100 years unexpired lease term is worth roughly the equivalent as a freehold. Where an additional 90 years added to all but the shortest lease, the property will be worth the same as a freehold for many years ahead.
| 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| Santander | If the property is leasehold, the remaining unexpired lease term at the end of the new mortgage term must be at least 50 years where any part of the mortgage is on Interest Only and 30 years if all loan parts are on Capital Repayment and Interest. You must report the unexpired lease term to us and await our instructions if:
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Irrespective of whether you are a tenant or a freeholder in Westminster,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 in-depth market knowledge and the close ties they enjoy with Westminster valuers.
Last Spring Charlie, started to get close to the 80-year mark with the lease on his first floor apartment in Westminster. Having bought his flat two decades ago, the lease term was of little interest. Fortunately, he realised he would soon be paying way over the odds for a lease extension. Charlie was able to extend his lease just ahead of time last April. Charlie and the landlord subsequently agreed on the final figure of £6,000 . If the lease had slipped lower than eighty years, the premium would have increased by a minimum £850.
In 2009 we were contacted by Mr and Mrs. K Rivera who, having completed a ground floor flat in Westminster in October 2001. The question was if we could estimate the premium would be for a 90 year extension to my lease. Identical flats in Westminster with 100 year plus lease were valued around £237,600. The mid-range ground rent payable was £45 collected every twelve months. The lease expired in 2093. Taking into account 67 years unexpired we approximated the compensation to the landlord to extend the lease to be between £11,400 and £13,200 not including fees.
An example of a Lease Extension decision for a Westminster premises 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 was in relation to 2 flats. The unexpired term as at the valuation date was 56 years.