Highbury leases on residential properties are gradually decreasing in value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of your lease gets more expensive. Legislation has been in place for sometime now which entitles qualifying Highbury residential leaseholders to extend the terms of long leases. Where you are a leasehold owner in Highbury you would be well advised to see if your lease has between seventy and 90 years remaining. In particular once the remaining lease term slips under eighty years, the cost of any lease extension increases dramatically as an element of the premium you will incur is what is known as a marriage value
Leasehold residencies in Highbury with over one hundred years unexpired on the lease are often referred to as ‘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 to be gained by buying the freehold unless savings on ground rent and service charges justify it.
| Lender | Requirement |
|---|---|
| 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Using our service will provide you enhanced control over the value of your Highbury leasehold, as your property will be more valuable and saleable in relation to the lease length should you wish to sell. The conveyancers that we work with have a in-depth market knowledge handling many hundreds of lease extensions or freehold purchase transactions.
Last October Oscar, came precariously near to the 80-year mark with the lease on his purpose- built apartment in Highbury. Having purchased his flat two decades ago, the lease term was of minimal relevance. Fortunately, he noticed he would imminently be paying an escalated premium for a lease extension. Oscar extended the lease just ahead of time last July. Oscar and the landlord who owned the flat above in the end settled on sum of £5,500 . If the lease had slid below eighty years, the figure would have escalated by a minimum £1,150.
In 2011 we were called by Mrs Erin Torres who, having completed a newly refurbished flat in Highbury in February 2007. The question was if we could estimate the price could be for a ninety year extension to my lease. Identical premises in Highbury with an extended lease were valued around £166,400. The mid-range amount of ground rent was £60 invoiced quarterly. The lease finished on 9 September 2078. Considering the 54 years remaining we estimated the compensation to the landlord for the lease extension to be within £32,300 and £37,400 exclusive of costs.
An example of a Lease Extension matter before the tribunal for a Highbury premises is Lower Flat 16A Beatty Road in September 2012. The premium payable was £13,577. The terms of the lease has been agreed between the Applicants and the First Respondent and the Tribunal did not seek to disturb that agreement. This case affected 1 flat.