It’s an underpublicised truth that a West Smithfield residential lease is a deteriorating asset. The lease value drops in proportion to its lease length. The extent of this is not fully appreciated in the first few years due to the reduction being disguised by increases in the West Smithfield property prices.Once your lease gets to 85ish years, you should start considering a lease extension. If the number of years remaining falls under 80 years, you will end up paying 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 Most leasehold owners in West Smithfield will be able to extend under the legislation; however a lawyer will be able to confirm if you are eligibility. In some situations you may not qualify. There are also strict timeframes and procedures to be adhered to once the process has commenced and you will need to be guided by your lawyer throughout the formalities.
It is conventional wisdom that a property with in excess of one hundred years remaining is worth roughly the same as a freehold. Where an further ninety years added to all but the shortest lease, the property will be equivalent in value to a freehold for many years in the future.
| 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; |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| 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 lawyers that we work with procure West Smithfield 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.
Subsequent to protracted correspondence with the freeholder of her leasehold apartment in West Smithfield, Freya initiated the lease extension process as the 80 year threshold was rapidly approaching. The transaction was finalised in May 2014. The landlord’s charges were kept to an absolute minimum.
Mr and Mrs. W Rodríguez owned a recently refurbished apartment in West Smithfield in April 1995. We are asked if we could estimate the compensation to the landlord could be to extend the lease by an additional years. Similar premises in West Smithfield with an extended lease were worth £295,000. The mid-range ground rent payable was £45 billed annually. The lease came to a finish in 2099. Given that there were 74 years unexpired we approximated the compensation to the landlord for the lease extension to be within £8,600 and £9,800 not including professional charges.
An example of a Lease Extension decision for a West Smithfield property is Flat 89 Trinity Court Grays Inn Road in February 2013. the Tribunal found that the premium to be paid by the tenant on the grant of a new lease, in accordance with section 56 and Schedule 13 to the Leasehold Reform, Housing and Urban Development Act 1993 should be £36,229. This case was in relation to 1 flat. The number of years remaining on the existing lease(s) was 66.8 years.