The market value of West Smithfield leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The expense of a lease extension can increase materialy once the unexpired lease term is less than 80 years
Leasehold premises in West Smithfield with more than 100 years left on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such situations there is often little upside in buying the freehold unless savings on ground rent and maintenance charges merit it.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| 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. |
Regardless of whether you are a tenant or a landlord in West Smithfield,the lease extension experts that we work with will always be prepared to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with West Smithfield valuers.
During the course of the last few months Jonathan, started to get near to the 80-year threshold with the lease on his basement flat in West Smithfield. In buying his property two decades ago, the length of the lease was of minimal interest. Fortunately, he became aware that he would soon be paying an escalated premium for a lease extension. Jonathan extended the lease just in the nick of time last April. Jonathan and the freeholder eventually agreed on an amount of £5,500 . If the lease had descended below eighty years, the price would have become more costly by a minimum £1,000.
Last Winter we were e-mailed by Mr G Davis , who bought a one bedroom apartment in West Smithfield in October 2006. We are asked if we could estimate the price would likely be for a 90 year lease extension. Identical properties in West Smithfield with 100 year plus lease were worth £225,800. The mid-range amount of ground rent was £60 collected every twelve months. The lease terminated on 22 February 2086. Considering the 60 years outstanding we calculated the compensation to the landlord to extend the lease to be within £24,700 and £28,600 plus professional charges.
An example of a Lease Extension decision for a West Smithfield flat 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 affected 1 flat. The remaining number of years on the lease was 66.8 years.