The re-sale value of a leasehold property in Cheam depends on how long the lease has left to run. If it is close to or fewer than eighty years you should foresee problems on re-sale, so it is recommended to arrange for the lease to be extended before purchasing. It is preferable to start the process of extending the lease is when the lease still has 82 years unexpired so that formalities can be addressed in advance of the eighty year cut off point. Current legislation enables Cheam qualifying lessees to a ninety year extension added to their unexpired lease term (ie if your lease has fifty years left the statutory lease extension will provide a new term of 140 years). The intention of the valuation is to arrive at an opinion of the premium payable by the lessee to the freeholder for the acquisition of the lease extension.
Leasehold residencies in Cheam with over one hundred years left on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your property. In such situations there is often little to be gained by buying the freehold unless savings on ground rent and service charges warrant it.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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; |
| 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. |
| 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. |
The conveyancers that we work with procure Cheam 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.
Lewis owned a conversion flat in Cheam being marketed with a lease of a few days over 72 years unexpired. Lewis informally spoke with his landlord being a well known Bristol-based freehold company and enquired on a premium to extend the lease. The freeholder was keen to give an extension on non-statutory terms taking the lease to 125 years subject to an increased rent to £100 yearly. No ground rent would be due on a lease extension were Lewis to invoke his statutory right. Lewis procured expert advice and was able to make a more informed decision and handle with the matter and readily saleable.
Last year we were phoned by Mr Harvey Rose , who completed a newly refurbished apartment in Cheam in October 1998. We are asked if we could estimate the price would likely be to prolong the lease by 90 years. Comparable residencies in Cheam with an extended lease were valued around £191,400. The average amount of ground rent was £55 invoiced yearly. The lease end date was on 16 March 2080. Considering the 54 years as a residual term we estimated the compensation to the freeholder for the lease extension to be between £34,200 and £39,600 not including legals.
An example of a Lease Extension case for a Cheam property 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 affected 1 flat. The unexpired residue of the current lease was 60.43 years.