Unfortunately that a Highgate residential lease is a deteriorating asset. The lease value drops in proportion to its lease length. The extent of this is taken for granted in the early years due to the loss of value being disguised by increases in the Highgate property market.Once your lease nears 85ish years, you need to start thinking about a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease slips lower than 80 years - otherwise a higher premium will be due. The majority of flat owners in Highgate will be able to extend under the legislation; however a conveyancing solicitor should be able to clarify if you are eligibility. In some cases you may not qualify. There are also strict timeframes and procedures to be adhered to once the process is instigated and you will need to be guided by your lawyer from beginning to end of the process.
It is conventional wisdom that a residential leasehold with more than 100 years unexpired lease term is worth roughly the same 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 in the future.
| 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. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 75 years plus the term of the mortgage at the outset of the mortgage. |
The lawyers that we work with undertake Highgate 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.
Elijah was the the leasehold proprietor of a conversion flat in Highgate being marketed with a lease of fraction over 61 years left. Elijah informally approached his landlord a well known local-based freehold company and enquired on a premium to extend the lease. The freeholder was prepared to give an extension on non-statutory terms taking the lease to 125 years subject to a rise in the rent to £50 per annum. Ordinarily, ground rent would not be due on a lease extension were Elijah to invoke his statutory right. Elijah procured expert legal guidance and was able to make a more informed judgement and handle with the matter and ending up with a market value flat.
In 2014 we were called by Mrs N Smith who, having was assigned a lease of a studio flat in Highgate in October 2010. The question was if we could approximate the price would be to prolong the lease by a further 90 years. Identical flats in Highgate with 100 year plus lease were worth £270,000. The mid-range amount of ground rent was £55 invoiced per annum. The lease ran out in 2101. Considering the 75 years outstanding we estimated the compensation to the freeholder for the lease extension to be within £9,500 and £11,000 plus costs.
An example of a Lease Extension decision for a Highgate flat is Flat 2A 19 Shepherds Hill in June 2014. The tribunal concluded in accordance with section 48 and schedule 13 of the Leasehold Reform,Housing and Urban Development Act (the 1993 Act) that the premium payable in respect of the grant of a new lease for the Flat be £24,303 (twenty four thousand three hundred and three pounds) This case affected 1 flat. The unexpired term was 67.85 years.