Unfortunately that a Sketty residential lease is a wasting asset. The lease value drops in proportion to its lease length. The extent of this is taken for granted in the early years due to the loss of value being disguised by increases in the Sketty property market.Once your lease gets to 85ish years, you should start thinking about a lease extension. If lease term slips under 80 years, you will end up paying 50% of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of extra value that a lease extension will add the property Most leasehold owners in Sketty will be able to extend under the legislation; however a lawyer will be able to confirm whether you qualify for an extension. In some cases you may not qualify. There are also strict timetables and procedures to follow once the process has commenced and you will need to be guided by your conveyancer throughout the formalities.
Leasehold residencies in Sketty with more than one hundred years left on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such situations there is often little upside in purchasing the reversionary interest unless savings on ground rent and service charges warrant it.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 85 years from the date of completion of the mortgage. Please ensure that you explain the implications of a short term lease to the borrower. |
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Birmingham Midshires | 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 |
The conveyancers that we work with handle Sketty 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.
18 months ago Evan, came dangerously close to the eighty-year threshold with the lease on his studio flat in Sketty. Having purchased his home two decades ago, the unexpired term was of little concern. Thankfully, he noticed he needed to take action soon on Extending the lease. Evan was able to extend his lease just in the nick of time in June. Evan and the freeholder ultimately agreed on a premium of £5,500 . If the lease had gone below 80 years, the price would have become more exhorbitant by at least £1,025.
In 2013 we were approached by Mrs R Robinson who, having owned a one bedroom flat in Sketty in October 2008. The dilemma was if we could shed any light on how much (approximately) premium would likely be to extend the lease by an additional years. Identical homes in Sketty with 100 year plus lease were worth £300,000. The average ground rent payable was £50 invoiced monthly. The lease elapsed on 25 March 2100. Taking into account 75 years remaining we estimated the compensation to the landlord to extend the lease to be between £9,500 and £11,000 exclusive of professional charges.
In 2010 we were called by Ms Emma Roux who, having owned a one bedroom flat in Sketty in July 2001. The dilemma was if we could estimate the premium would likely be to extend the lease by 90 years. Comparative flats in Sketty with a long lease were valued about £250,400. The average amount of ground rent was £65 invoiced yearly. The lease ran out on 18 October 2089. Given that there were 64 years remaining we approximated the compensation to the landlord to extend the lease to be between £19,000 and £22,000 not including professional charges.