Cheadle leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of the lease becomes more expensive. It is the case that most Cheadle tenants have the right to extend their lease by an additional 90 years in accordance with the 1993 Leasehold Reform Act. If you are a leasehold owner in Cheadle you should check if your lease has between 70 and ninety years remaining. In particular once the remaining lease term slips under eighty years, the cost of any lease extension sharply increases as part of the premium you pay is what is known as a marriage value
It is conventional wisdom that a residential leasehold with over 100 years unexpired lease term is worth approximately the same as a freehold. Where an additional ninety years added to any lease with more than 30 years remaining, the premises will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 30 years plus the term of the mortgage at the outset of the mortgage. |
The conveyancers that we work with undertake Cheadle 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.
In 2014 Charlie, started to get near to the eighty-year mark with the lease on his studio apartment in Cheadle. In buying his flat twenty years ago, the unexpired term was of no concern. Luckily, he realised he needed to take steps soon on Extending the lease. Charlie arranged for a lease extension at the eleventh hour in September. Charlie and the freeholder in the end agreed on sum of £6,000 . If the lease had dropped below 80 years, the amount would have increased by at least £850.
In 2012 we were contacted by Mr K Bailey who, having owned a purpose-built flat in Cheadle in October 2004. We are asked if we could estimate the price could be to prolong the lease by an additional years. Comparative properties in Cheadle with a long lease were valued about £235,200. The average amount of ground rent was £45 collected annually. The lease finished in 2092. Having 66 years as a residual term we calculated the compensation to the freeholder for the lease extension to be between £12,400 and £14,200 plus costs.
Last Autumn we were phoned by Mr and Mrs. F Hernández , who bought a purpose-built flat in Cheadle in July 1995. The dilemma was if we could approximate the price could be to extend the lease by 90 years. Similar homes in Cheadle with a long lease were valued around £280,000. The average ground rent payable was £55 collected quarterly. The lease came to a finish in 2103. Given that there were 77 years remaining we calculated the premium to the freeholder for the lease extension to be between £13,300 and £15,400 not including professional charges.