Cheam 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. Legislation has been in place for sometime now allowing qualifying Cheam residential leaseholders to extend the terms of long leases. If you are a leasehold owner in Cheam you must investigate if your lease has between 70 and ninety years remaining. There are compelling reasons why a Cheam flat owner with a lease having around eighty years remaining should take steps to ensure that a lease extension is put in place without delay
Leasehold residencies in Cheam with more than one hundred years left 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 home. 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 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Using our service gives you increased control over the value of your Cheam leasehold, as your property will be more valuable and marketable in respect of lease length should you wish to sell. The conveyancers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Thomas was the the leasehold proprietor of a studio flat in Cheam on the market with a lease of just over 61 years left. Thomas informally contacted his freeholder a well known Manchester-based freehold company for a lease extension. The freeholder was prepared to agree an extension on non-statutory terms taking the lease to 125 years subject to a new rent initially set at £200 per annum and increase every twenty five years thereafter. No ground rent would be payable on a lease extension were Thomas to invoke his statutory right. Thomas obtained expert advice and was able to make a more informed judgement and handle with the matter and sell the flat.
In 2013 we were e-mailed by Mr G Mason who, having was assigned a lease of a ground floor apartment in Cheam in November 2010. We are asked if we could shed any light on how much (roughly) premium would likely be for a ninety year extension to my lease. Comparable premises in Cheam with 100 year plus lease were in the region of £295,000. The average ground rent payable was £45 collected quarterly. The lease ran out in 2099. Considering the 74 years as a residual term we calculated the premium to the landlord to extend the lease to be between £9,500 and £11,000 exclusive of costs.
An example of a Lease Extension decision for a Cheam flat is 33 The Maisonettes Alberta Avenue in June 2014. the Tribunal decided that the premium payable for the grant of a new lease be the sum of £20,680 (Twenty Thousand six hundred and eighty pounds). This case was in relation to 1 flat. The unexpired term as at the valuation date was 60.43 years.