Chobham leases on residential properties are gradually diminishing 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 allowing qualifying Chobham residential leaseholders to extend the terms of long leases. If you are a leasehold owner in Chobham you should see if your lease has between 70 and ninety years remaining. In particular once the remaining lease term slips under eighty years, the premium due on any lease extension sharply increases as an element of the premium you will incur is what is known as a marriage value
Leasehold properties in Chobham with over 100 years unexpired on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such circumstances there is often little upside in purchasing the reversionary interest unless savings on ground rent and service charges merit it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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. |
| 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. |
| 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 |
The lawyers that we work with undertake Chobham 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.
Subsequent to protracted negotiations with the landlord of her garden apartment in Chobham, Niamh commenced the lease extension process as the 80 year threshold was rapidly nearing. The transaction was finalised in August 2010. The landlord’s costs were kept to an absolute minimum.
Dr E Simon was assigned a lease of a one bedroom flat in Chobham in October 2010. The question was if we could shed any light on how much (roughly) premium could be to prolong the lease by an additional years. Comparable properties in Chobham with 100 year plus lease were worth £246,800. The mid-range ground rent payable was £60 billed yearly. The lease finished on 13 November 2076. Taking into account 50 years left we calculated the compensation to the freeholder for the lease extension to be within £44,700 and £51,600 exclusive of legals.
In 2013 we were called by Mr and Mrs. H Howard who, having completed a garden apartment in Chobham in February 2008. We are asked if we could approximate the premium could be for a ninety year extension to my lease. Identical flats in Chobham with 100 year plus lease were worth £208,200. The average amount of ground rent was £65 invoiced monthly. The lease ran out on 25 October 2087. Considering the 61 years outstanding we calculated the compensation to the landlord for the lease extension to be between £20,000 and £23,000 exclusive of costs.