It’s an underpublicised truth that a Cheam residential lease is a deteriorating asset. The lease value reduces in proportion to its lease length. The extent of this is not fully appreciated in the early years due to the deflation being disguised by increases in the Cheam property prices.Where your lease has approximately ninety years left, you should start thinking about a lease extension. If lease term dips under 80 years, you will end up paying 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of additional value that a lease extension will add the property The majority of flat owners in Cheam will be able to extend under the legislation; however a lawyer will be able to confirm whether you qualify for an extension. In some situations you may not qualify. There are also strict deadlines and procedures to be adhered to once the process is instigated and you will need to be guided by your conveyancer from beginning to end of the process.
It is generally accepted that a property with in excess of 100 years unexpired lease term is worth roughly the same as a freehold. Where an additional 90 years added to any lease with more than 45 years remaining, the residence will be equivalent in value to a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
| 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. |
Retaining our service gives you enhanced control over the value of your Cheam leasehold, as your property will be more valuable and marketable in relation to the lease length should you wish to sell. The lawyers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Last Christmas Leon, started to get near to the eighty-year threshold with the lease on his studio flat in Cheam. Having purchased his property two decades ago, the unexpired term was of no bearing. Luckily, he realised he needed to take action soon on Extending the lease. Leon arranged for a lease extension just ahead of time in January. Leon and the landlord subsequently settled on an amount of £5,500 . If he not met the deadline, the premium would have gone up by a minimum £850.
Ms Shannon Johnson was assigned a lease of a ground floor flat in Cheam in October 2009. The question was if we could shed any light on how much (roughly) premium would be for a ninety year lease extension. Identical premises in Cheam with an extended lease were valued about £250,400. The average amount of ground rent was £65 invoiced annually. The lease concluded on 2 August 2089. Given that there were 64 years unexpired we calculated the compensation to the landlord for the lease extension to be between £19,000 and £22,000 plus legals.
An example of a Lease Extension decision for a Cheam premises 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 related to 1 flat. The number of years remaining on the existing lease(s) was 60.43 years.