Sparkhill 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 gets more expensive. Legislation has been in place for sometime now allowing qualifying Sparkhill residential leaseholders to extend the terms of long leases. If you are a leasehold owner in Sparkhill you should check if your lease has between 70 and ninety years remaining. In particular once the remaining lease term slips under eighty years, the compensation to the landlord for any lease extension increases dramatically as an element of the premium you pay is what is known as a marriage value
It is generally considered that a residential leasehold with more than 100 years remaining is worth approximately the equivalent as a freehold. Where an additional ninety years added to any lease with more than 35 years remaining, the premises will be worth the same as a freehold for many years in the future.
| 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. |
| 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 conveyancing solicitors that we work with undertake Sparkhill 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.
Aarav owned a conversion apartment in Sparkhill on the market with a lease of fraction over sixty years outstanding. Aarav informally spoke with his landlord being a well known local-based freehold company and enquired on a premium to extend the lease. The freeholder indicated a willingness to extend the lease to 125 years on the basis of a rise in the rent to £50 per annum. No ground rent would be payable on a lease extension were Aarav to exercise his statutory right. Aarav obtained expert legal guidance and was able to make an informed decision and deal with the matter and readily saleable.
Last Winter we were called by Mr H Patel , who bought a basement flat in Sparkhill in March 2009. We are asked if we could shed any light on how much (approximately) price could be for a 90 year extension to my lease. Comparative properties in Sparkhill with an extended lease were worth £198,800. The mid-range ground rent payable was £55 collected every twelve months. The lease lapsed on 25 June 2080. Given that there were 55 years as a residual term we approximated the compensation to the freeholder for the lease extension to be between £33,300 and £38,400 plus costs.
Mr Aaron Davis bought a studio apartment in Sparkhill in July 1997. We are asked if we could approximate the compensation to the landlord would likely be to prolong the lease by 90 years. Comparative homes in Sparkhill with a long lease were worth £300,000. The mid-range amount of ground rent was £50 collected every twelve months. The lease expiry date was on 25 June 2100. Given that there were 75 years remaining we approximated the premium to the landlord to extend the lease to be between £9,500 and £11,000 not including costs.