Owning a flat usually means owning a lease of the property, which has a finite term of years. your lease will ordinarily be granted for a prescribed period of time , ordinarily 99 or 125 years, although we have seen longer and shorter terms in St John's Wood. Inevitably, the length of lease remaining shortens over time. This is often overlooked and only becomes a problem when the property has to be disposed of or refinanced. The fewer the years remaining the lower the value of the property and the more it will cost to procure a lease extension. Qualifying long lease owners in St John's Wood have the legal entitlement to extend the lease for a further ninety years in accordance with legislation. Please give due deliberation before delaying your St John's Wood lease extension. Putting off the cost now only increases the price you will eventually incur for a lease extension
It is conventional wisdom that a residential leasehold with more than 100 years remaining is worth roughly the same as a freehold. Where an further 90 years added to any lease with more than 30 years remaining, the property will be worth the same as a freehold for many years in the future.
| 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; |
| Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
| 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 |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| 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. |
The conveyancers that we work with undertake St John's Wood 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.
Alfie owned a high value apartment in St John's Wood on the market with a lease of fraction over 72 years unexpired. Alfie informally spoke with his freeholder being a well known local-based freehold company for a lease extension. The freeholder was prepared to give an extension on non-statutory terms taking the lease to 125 years subject to a new rent initially set at £150 per annum and increase every twenty five years thereafter. No ground rent would be due on a lease extension were Alfie to exercise his statutory right. Alfie procured expert advice and was able to make a more informed judgement and deal with the matter and ending up with a market value flat.
Mr P Leroy moved into a basement flat in St John's Wood in April 2004. We are asked if we could shed any light on how much (approximately) compensation to the landlord would likely be for a 90 year lease extension. Comparative flats in St John's Wood with 100 year plus lease were in the region of £227,800. The average ground rent payable was £45 invoiced monthly. The lease ended on 26 November 2089. Considering the 65 years unexpired we estimated the compensation to the freeholder to extend the lease to be within £13,300 and £15,400 exclusive of expenses.
An example of a Lease Extension matter before the tribunal for a St John's Wood flat is Garden Flat 195 Goldhurst Terrace in May 2012. The Tribunal held in accordance with section 48 and Schedule 13 of the Leasehold Reform, Housing and Urban Development Act 1993 that the premium for the extended lease should be £60,855.00. This case related to 1 flat. The unexpired term as at the valuation date was 60.16 years.