Fitzrovia leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of the lease gets more expensive. It is the case that most Fitzrovia tenants have the right to extend their lease by an additional 90 years in accordance with the 1993 Leasehold Reform Act. If you are a leasehold owner in Fitzrovia you should check if your lease has between 70 and 90 years left. In particular once the remaining lease term slips under eighty years, the amount payable for any lease extension increases dramatically as part of the premium you pay is what is known as a marriage value
Leasehold residencies in Fitzrovia with in excess of 100 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 premises. In such situations there is often little upside in buying the reversionary interest unless savings on ground rent and maintenance charges warrant it.
| Lender | Requirement |
|---|---|
| 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; |
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Irrespective of whether you are a tenant or a freeholder in Fitzrovia,the lease extension experts that we work with will always be prepared to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Fitzrovia valuers.
Last Winter Max, started to get near to the 80-year threshold with the lease on his two bedroom apartment in Fitzrovia. Having bought his property 18 years previously, the unexpired term was of little interest. by good luck, he recognised he needed to take action soon on Extending the lease. Max extended the lease at the eleventh hour last March. Max and the landlord who owned the flat above subsequently agreed on a premium of £6,000 . If the lease had fallen lower than eighty years, the price would have escalated by at least £1,050.
Last month we were called by Dr W Wilson , who bought a studio apartment in Fitzrovia in July 2009. We are asked if we could approximate the compensation to the landlord would be to prolong the lease by ninety years. Similar residencies in Fitzrovia with 100 year plus lease were valued about £186,000. The mid-range ground rent payable was £65 collected every twelve months. The lease terminated on 10 October 2082. Taking into account 58 years outstanding we approximated the compensation to the landlord to extend the lease to be between £24,700 and £28,600 not including fees.
An example of a Freehold Enfranchisement matter before the tribunal for a Fitzrovia flat is 20 Avonwick Road in July 2013. The Tribunal was dealing with an application under Section 26 of the Leasehold Reform Housing and Urban Development Act 1993 for a determination of the freehold value of the property. It was concluded that the price to be paid was Fifteen Thousand Nine Hundred and Seventy (£15,970) divided as to £8,200 for Flat 20 and £7,770 for Flat 20A This case was in relation to 1 flat. The unexpired lease term was 73.26 years.