For anyone whose Sandiacre home is held on a long lease, our message is clear – if nothing is done, your property will eventually revert to the freeholder, leaving you empty-handed. The fewer the years remaining the lower the value of the property and the more it will cost to extend the lease.
It is conventional wisdom that a residential leasehold with in excess of one hundred years unexpired lease term is worth roughly the equivalent as a freehold. Where an further 90 years added to all but the shortest lease, the property will be worth the same as a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must also be not less than 75 years at the outset of the mortgage. |
| 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 conveyancers that we work with procure Sandiacre 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.
In recent months Hugo, came precariously close to the 80-year threshold with the lease on his ground floor flat in Sandiacre. Having bought his home 19 years ago, the lease term was of little bearing. As luck would have it, he became aware that he needed to take steps soon on Extending the lease. Hugo was able to extend his lease at the eleventh hour in March. Hugo and the landlord ultimately settled on sum of £5,000 . If the lease had fallen below 80 years, the premium would have become more costly by a minimum £875.
Last month we were called by Mr and Mrs. U Hernández , who acquired a purpose-built flat in Sandiacre in June 2002. We are asked if we could estimate the compensation to the landlord could be for a 90 year lease extension. Identical residencies in Sandiacre with 100 year plus lease were in the region of £280,000. The average ground rent payable was £45 collected every twelve months. The lease lapsed in 2095. Considering the 70 years remaining we calculated the compensation to the landlord to extend the lease to be within £12,400 and £14,200 exclusive of legals.
Mr and Mrs. O Dupont was assigned a lease of a purpose-built flat in Sandiacre in July 1999. We are asked if we could approximate the price would be to prolong the lease by an additional years. Comparative homes in Sandiacre with 100 year plus lease were valued about £218,400. The average amount of ground rent was £60 billed monthly. The lease lapsed on 17 April 2084. Taking into account 59 years as a residual term we estimated the premium to the freeholder for the lease extension to be within £27,600 and £31,800 exclusive of costs.