The market value of a leasehold property in Sheldon depends on how long the lease has left to run. If it is close to or less than eighty years you should envisage problems on re-sale, so it is recommended to arrange for the lease to be extended ahead of purchasing. It is ideal to start the lease extension process when a lease still has 82 years to run so that a lease extension can be concluded well before the 80 year threshold. Statute enables Sheldon qualifying lessees to a ninety year extension added to their unexpired lease term (ie if your lease has fifty years remaining the statutory lease extension will provide a new term of 140 years). The purpose of the valuation is to arrive at an opinion of the sum payable by the lessee to the freeholder for the purchase of the lease extension.
Leasehold properties in Sheldon with in excess of one hundred years left on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your home. 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 |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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; |
| 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. |
| 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 |
Using our service gives you increased control over the value of your Sheldon leasehold, as your property will be more valuable and saleable in terms of lease length should you want to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Luca owned a high value flat in Sheldon being sold with a lease of fraction over 59 years left. Luca on an informal basis spoke with his freeholder being a well known London-based freehold company and enquired on a premium to extend the lease. The freeholder indicated a willingness to extend the lease to 125 years subject to an increased rent to £125 annually. No ground rent would be due on a lease extension were Luca to exercise his statutory right. Luca procured expert advice and secured satisfactory deal informally and readily saleable.
Last Spring we were called by Mr Aarav Ward , who moved into a purpose-built apartment in Sheldon in February 1995. The dilemma was if we could approximate the compensation to the landlord would likely be to prolong the lease by an additional years. Identical premises in Sheldon with an extended lease were valued about £166,400. The average ground rent payable was £60 collected annually. The lease terminated on 17 July 2080. Given that there were 54 years remaining we approximated the premium to the landlord to extend the lease to be between £32,300 and £37,400 exclusive of professional charges.
Mr and Mrs. A Wood was assigned a lease of a studio apartment in Sheldon in August 1996. We are asked if we could shed any light on how much (approximately) compensation to the landlord would be for a 90 year extension to my lease. Identical flats in Sheldon with an extended lease were worth £227,800. The average ground rent payable was £45 collected per annum. The lease terminated in 2091. Considering the 65 years remaining we estimated the premium to the freeholder for the lease extension to be within £13,300 and £15,400 not including fees.