West London 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 becomes more expensive. Most owners of residential leasehold property in West London enjoy rights under legislation to extend the terms of their leases. Where you are a leasehold owner in West London you really ought to investigate if your lease has between 70 and 90 years remaining. There are good reasons why a West London flat owner with a lease having around eighty years unexpired should take action to ensure that a lease extension is put in place without delay
Leasehold residencies in West London with more than one hundred years remaining on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such situations there is often little upside in purchasing the reversionary interest unless savings on ground rent and service 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; |
| 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. |
| 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Retaining our service gives you enhanced control over the value of your West London leasehold, as your property will be more valuable and marketable in respect of lease length should you want to sell. The conveyancing solicitors that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Jamie owned a studio flat in West London being marketed with a lease of a little over 72 years remaining. Jamie informally approached his freeholder a well known London-based freehold company for a lease extension. The landlord was keen to grant an extension on non-statutory terms taking the lease to 125 years subject to a new rent at the outset set at £100 per annum and doubled every twenty five years thereafter. No ground rent would be payable on a lease extension were Jamie to exercise his statutory right. Jamie procured expert advice and was able to make an informed judgement and handle with the matter and sell the property.
Last year we were called by Mr and Mrs. T Ward , who owned a basement apartment in West London in April 1996. The question was if we could shed any light on how much (roughly) compensation to the landlord would be for a 90 year lease extension. Similar properties in West London with an extended lease were valued around £227,800. The average ground rent payable was £45 collected yearly. The lease end date was on 26 August 2089. Having 65 years as a residual term we estimated the compensation to the landlord for the lease extension to be within £13,300 and £15,400 not including legals.
An example of a Lease Extension decision for a West London premises is 137 & 139 Haberdasher Street in December 2013. The Tribunal determines 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 for each Property should be £12,350.00. This case was in relation to 2 flats. The unexpired term as at the valuation date was 72.39 years.