West Smithfield leases on domestic properties are gradually losing value. Where your lease has about ninety years unexpired, you should start thinking about a lease extension. Eighty years is a significant number: when the unexpired term of a lease falls below this level then you begin incurring an additional element called marriage value. Leasehold owners in West Smithfield will mostly be legally entitled to a lease extension; however a solicitor should be able check if you qualify. In some cases you may not be entitled. There are also strict deadlines and procedures to comply with once the process has commenced so it’s wise to be guided by a lawyer during the process.
Leasehold properties in West Smithfield with in excess of 100 years outstanding on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such situations there is often little upside in buying the reversionary interest unless savings on ground rent and estate 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
| 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. |
| 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. |
The conveyancing solicitors that we work with undertake 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 lawyer we work with provide it.
Gabriel owned a high value flat in West Smithfield on the market with a lease of a little over sixty years outstanding. Gabriel informally spoke with his freeholder being a well known London-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 on the basis of a rise in the rent to £50 yearly. Ordinarily, ground rent would not be payable on a lease extension were Gabriel to invoke his statutory right. Gabriel procured expert advice and secured satisfactory resolution without going to tribunal and ending up with a market value flat.
Last Summer we were called by Dr Freddie Leroy , who took over the lease of a ground floor flat in West Smithfield in January 2003. The dilemma was if we could estimate the compensation to the landlord could be for a ninety year lease extension. Comparable flats in West Smithfield with an extended lease were worth £295,000. The mid-range amount of ground rent was £50 collected annually. The lease lapsed in 2099. Taking into account 75 years remaining we calculated the compensation to the freeholder for the lease extension to be between £8,600 and £9,800 not including expenses.
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.