Sherborne leases on residential properties are gradually diminishing in value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of the lease becomes more expensive. Most owners of residential leasehold property in Sherborne enjoy rights under legislation to extend the terms of their leases. If you are a leasehold owner in Sherborne you really ought to investigate if your lease has between 70 and ninety years remaining. There are good reasons why a Sherborne leaseholder with a lease having around 80 years unexpired should take action to ensure that a lease extension is put in place without delay
It is conventional wisdom that a property with more than one hundred years unexpired lease term is worth roughly the same as a freehold. Where an additional ninety years added to any lease with more than 35 years remaining, 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. |
| 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; |
| 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The lawyers that we work with handle Sherborne 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 conveyancer we work with provide it.
Last year Sam, came perilously close to the eighty-year threshold with the lease on his ground floor flat in Sherborne. In buying his property two decades ago, the lease term was of minimal concern. Thankfully, it dawned on him that he would imminently be paying way over the odds for Extending the lease. Sam was able to extend his lease at the eleventh hour last July. Sam and the landlord in the end settled on sum of £5,500 . If the lease had fallen to less than 80 years, the premium would have increased by a minimum £900.
Last Spring we were approach by Mr W Gray , who owned a garden apartment in Sherborne in February 2001. We are asked if we could shed any light on how much (roughly) price would likely be to extend the lease by an additional years. Identical properties in Sherborne with 100 year plus lease were in the region of £275,000. The average ground rent payable was £45 invoiced per annum. The lease terminated on 5 November 2095. Taking into account 69 years as a residual term we estimated the compensation to the landlord to extend the lease to be between £12,400 and £14,200 plus legals.
Last Winter we were phoned by Mr Daniel Phillips , who bought a purpose-built apartment in Sherborne in January 2001. The question was if we could shed any light on how much (approximately) premium could be for a ninety year lease extension. Comparable homes in Sherborne with a long lease were in the region of £216,000. The mid-range ground rent payable was £60 collected annually. The lease ended on 21 January 2084. Having 58 years left we calculated the compensation to the freeholder to extend the lease to be between £28,500 and £33,000 plus legals.