Sandhurst leases on residential properties are gradually decreasing in value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of your lease gets more expensive. Legislation has been in place for sometime now allowing qualifying Sandhurst residential leaseholders to extend the terms of long leases. Where you are a leasehold owner in Sandhurst you would be well advised to see if your lease has between seventy and ninety years remaining. There are good reasons why a Sandhurst leaseholder with a lease having around 80 years left should take action to ensure that a lease extension is put in place without delay
Leasehold properties in Sandhurst with over one hundred years left on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such circumstances there is often little to be gained by purchasing the freehold unless savings on ground rent and estate charges warrant 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; |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| 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 Sandhurst 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.
Twenty four months ago Leon, came precariously near to the 80-year threshold with the lease on his garden flat in Sandhurst. In buying his property 19 years ago, the unexpired term was of little bearing. Thankfully, he noticed he would imminently be paying way over the odds for Extending the lease. Leon arranged for a lease extension at the eleventh hour in July. Leon and the landlord in the end agreed on a premium of £5,000 . If he failed to meet the deadline, the amount would have increased by at least £900.
In 2013 we were approached by Mr and Mrs. M Wilson who, having took over the lease of a first floor apartment in Sandhurst in June 2004. We are asked if we could shed any light on how much (roughly) premium could be for a ninety year extension to my lease. Identical properties in Sandhurst with an extended lease were in the region of £260,200. The average amount of ground rent was £65 invoiced monthly. The lease end date was in 2091. Considering the 66 years unexpired we calculated the premium to the landlord to extend the lease to be between £16,200 and £18,600 exclusive of costs.
Last Autumn we were called by Ms Emily Stewart , who owned a purpose-built apartment in Sandhurst in October 2003. We are asked if we could approximate the compensation to the landlord would be for a ninety year lease extension. Comparable properties in Sandhurst with an extended lease were valued about £198,800. The average amount of ground rent was £55 invoiced every twelve months. The lease lapsed on 5 July 2080. Having 55 years left we calculated the premium to the freeholder for the lease extension to be between £33,300 and £38,400 exclusive of expenses.