It’s a harsh truth that a West Hampstead residential lease is a deteriorating asset. As the lease term diminishes so does the value of the property. The extent of this is not fully appreciated in the first few years due to the depreciation being disguised by increases in the West Hampstead property market.Once your lease nears 85ish years, you need to start considering a lease extension. If the number of years remaining dips below eighty years, you will then be required to pay 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of extra value that a lease extension will add the property The majority of flat owners in West Hampstead will be able to extend under the legislation; however a lawyer should be able to clarify whether you qualify for an extension. In some situations you may not qualify. There are also strict timeframes and procedures to follow once the process is initiated and you will need to be guided by your conveyancer for the duration of the process.
It is conventional wisdom that a residential leasehold with more than one hundred years remaining is worth approximately the equivalent as a freehold. Where an further 90 years added to all but the shortest lease, the premises will be equivalent in value to a freehold for many years ahead.
| 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; |
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The conveyancers that we work with procure West Hampstead 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.
Last October Charlie, started to get near to the eighty-year mark with the lease on his two bedroom flat in West Hampstead. Having purchased his home two decades ago, the length of the lease was of little bearing. Fortunately, he became aware that he would imminently be paying an escalated premium for a lease extension. Charlie was able to extend his lease at the eleventh hour in June. Charlie and the freeholder eventually settled on sum of £5,500 . If he not met the deadline, the sum would have escalated by a minimum £1,125.
Last Summer we were approach by Dr U Campbell , who purchased a purpose-built flat in West Hampstead in May 2010. We are asked if we could shed any light on how much (approximately) compensation to the landlord would be to extend the lease by an additional years. Identical homes in West Hampstead with an extended lease were in the region of £255,000. The average ground rent payable was £50 billed annually. The lease expired in 2096. Having 71 years left we approximated the premium to the landlord to extend the lease to be within £9,500 and £11,000 plus professional charges.
An example of a Lease Extension decision for a West Hampstead property is Flat A 372 Cricklewood Lane in January 2013. The Tribunal decided that the premium for the extended lease should be £5,750.00 and that the terms of the new lease should be those set out in annex to the decsion This case related to 1 flat.