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 |
|---|---|
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Coventry Building Society | A minimum of 70 years unexpired lease at completion for all scheme types apart from Lifetime Mortgages (Equity Release), which require a minimum unexpired term of 80 years at completion. |
| Lloyds TSB Scotland | Minimum 70 years from the date 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. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
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 2007. 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.