It’s a harsh certainty that a Sheldon residential lease is a wasting asset. As the lease term diminishes so does the value of the property. The extent of this is not fully appreciated in the first few years due to the loss of value being disguised by increases in the Sheldon property market.Where your lease has approximately 90 years left, you need to start considering a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease slips below eighty years - otherwise a higher premium will be due. Most flat owners in Sheldon will be able to extend under the legislation; however a lawyer should be able to confirm whether you are eligibility. In some cases you may not qualify. There are also strict deadlines and procedures to be adhered to once the process is initiated and you will need to be guided by your lawyer from beginning to end of the process.
Leasehold properties in Sheldon with more than 100 years outstanding on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such situations there is often little to be gained by buying the reversionary interest unless savings on ground rent and maintenance charges merit 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 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; |
| 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. |
| 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 procure Sheldon 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.
14 months ago Reuben, started to get near to the 80-year mark with the lease on his basement flat in Sheldon. In buying his flat two decades ago, the lease term was of little relevance. Luckily, he noticed he would imminently be paying an inflated amount for Extending the lease. Reuben arranged for a lease extension at the eleventh hour in January. Reuben and the landlord who owned the flat above eventually agreed on an amount of £6,000 . If he had missed the deadline, the premium would have increased by a minimum £975.
In 2012 we were approached by Mrs Millie Gray who, having moved into a studio flat in Sheldon in October 2006. We are asked if we could approximate the compensation to the landlord would likely be to extend the lease by 90 years. Comparable properties in Sheldon with an extended lease were valued around £176,200. The average ground rent payable was £65 billed monthly. The lease termination date was on 7 August 2081. Given that there were 56 years left we estimated the compensation to the freeholder for the lease extension to be between £29,500 and £34,000 not including legals.
In 2009 we were approached by Dr Adam Brooks who, having moved into a first floor apartment in Sheldon in July 2009. We are asked if we could shed any light on how much (roughly) premium would be for a ninety year extension to my lease. Comparable flats in Sheldon with 100 year plus lease were valued about £237,600. The mid-range ground rent payable was £45 collected annually. The lease concluded in 2092. Having 67 years remaining we calculated the compensation to the landlord for the lease extension to be within £11,400 and £13,200 not including legals.