With a domestic leasehold property in Sandown, you are in fact renting it for a certain period of time. Modern flat leases are usually granted for 99 years or 125. Even though this may appear like a long period of time, you should think about extending the lease sooner rather than later. The general rule is that the shorter the number of years is the cost of extending the lease becomes disproportionately more expensive notably once there are fewer than 80 years left. Residents in Sandown with a lease approaching 81 years remaining should seriously consider extending it without delay. Once a lease has below eighty years left, under the relevant legislation the freeholder is entitled to calculate and demand a greater premium, assessed on a technical calculation, known as “marriage value” which is payable.
Leasehold properties in Sandown with in excess of 100 years left on the lease are often regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such circumstances there is often little to be gained by buying the reversionary interest unless savings on ground rent and estate charges merit it.
| Lender | Requirement |
|---|---|
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| The Mortgage Works | Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term. Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed: Second hand property: - If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years - if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported - For equity share applications - advise us if the actual lease term is different than reported on the offer New build property: - If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house) - For equity share applications - always advise us if the actual lease term is different than reported on the offer Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below. SECOND HAND PROPERTIES Unacceptable - advise Issuing Office (Will be declined): - Unexpired lease term less than 70 years - Less than 30 years remaining at the end of the mortgage term - Ground Rent greater than 0.5% of the property value - Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more - Ground Rent is compounded RPI - Ground Rent review period less than or equal to 5 years Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability): - Unexpired lease term is 70 to 85 years - Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value - Ground Rent escalation is linked to any indices greater than RPI - Ground Rent escalation is linked to the value of the building* - Ground Rent review period is greater than 5 and less than 10 years - Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc - Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover) - Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover) - Anything that appears onerous, unusual or out of the ordinary Acceptable (no requirement to advise Issuing Office): - Unexpired lease term greater than 85 years - Ground Rent less than or equal to 0.1% of the property value - Ground Rent review period greater than or equal to 10 years - Ground Rent escalation less than or equal to RPI NEW BUILD PROPERTIES (includes office conversions) Unacceptable - advise Issuing Office (will be declined): - Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house - Any lease which is subject to a ground rent (or annual rent) being charged which is more than on a peppercorn basis - Any lease which is subject to a ground rent (or annual rent) being reviewed and altered on any review basis or methodology Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability): - Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc - Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover) - Service Charges greater than 1.0% of property value p/a (please provide details of what the charges cover) - Anything else appears onerous, unusual or out of the ordinary Acceptable (no requirement to advise Issuing Office): - Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house - A lease subject to a peppercorn ground rent (annual rent) charges For the avoidance of doubt, any new build properties completed but not sold pre 30 June 2022 will only be acceptable if the lease conforms to the above guidance * Where the Ground Rent escalation is linked to the value of the building, please provide the following: - How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property? - The current valuation and Ground Rent for each unit - What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned? - What is the right of appeal? And is this a documented process within the lease? - Who bears the cost of the valuation (and appeal) process? - Confirmation the review period is not less than twenty years LEASE EXTENSIONS We require all lease extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where you become aware that it does not meet these requirements, please refer to the Issuing Office Please ensure that all lender enquiries are submitted (with full documentation/requirements) at least 2 weeks prior to exchange to allow sufficient time for review and decisioning. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The lawyers that we work with handle Sandown 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 conveyancing solicitor we work with provide it.
Leo owned a high value flat in Sandown being sold with a lease of just over fifty eight years left. Leo on an informal basis approached his landlord a well known Manchester-based freehold company and enquired on a premium to extend the lease. The landlord indicated a willingness to extend the lease to 125 years on the basis of a new rent to start with set at £150 per annum and doubled every twenty five years thereafter. No ground rent would be payable on a lease extension were Leo to invoke his statutory right. Leo obtained expert advice and was able to make a more informed judgement and deal with the matter and sell the property.
Mr and Mrs. F Cox owned a one bedroom flat in Sandown in June 2006. The dilemma was if we could approximate the compensation to the landlord would likely be for a ninety year extension to my lease. Identical residencies in Sandown with 100 year plus lease were worth £189,000. The average amount of ground rent was £55 invoiced per annum. The lease expiry date was in 2079. Given that there were 53 years as a residual term we calculated the premium to the freeholder to extend the lease to be between £28,500 and £33,000 not including expenses.
Last Summer we were contacted by Mr and Mrs. F Thompson , who completed a recently refurbished flat in Sandown in April 2000. The question was if we could approximate the price would likely be to extend the lease by 90 years. Similar flats in Sandown with an extended lease were in the region of £290,000. The mid-range ground rent payable was £45 collected every twelve months. The lease concluded in 2099. Taking into account 73 years as a residual term we estimated the compensation to the landlord to extend the lease to be within £9,500 and £11,000 plus expenses.