Sully leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of your lease becomes more expensive. It is the case that most Sully tenants have the right to extend their lease by an additional 90 years under the 1993 Leasehold Reform Act. If you are a leasehold owner in Sully you really ought to see if your lease has between 70 and 90 years left. In particular once the remaining lease term slips under 80 years, the compensation to the landlord for any lease extension increases dramatically as part of the premium you pay is what is known as a marriage value
It is generally considered that a property with more than 100 years unexpired lease term is worth roughly the same as a freehold. Where an additional ninety years added to all but the shortest lease, 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. |
| Chelsea Building Society | 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. |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must also be not less than 75 years at the outset of the mortgage. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The conveyancers that we work with undertake Sully 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.
Rory owned a 2 bedroom flat in Sully being marketed with a lease of a few days over 59 years remaining. Rory informally approached his landlord being a well known Bristol-based freehold company and enquired on a premium to extend the lease. The freeholder was keen to grant an extension on non-statutory terms taking the lease to 125 years subject to an increased rent to £125 per annum. Ordinarily, ground rent would not be due on a lease extension were Rory to exercise his statutory right. Rory procured expert advice and was able to make a more informed judgement and handle with the matter and readily saleable.
In 2010 we were phoned by Mrs Aimee Torres who, having completed a one bedroom flat in Sully in November 2009. The dilemma was if we could estimate the price would likely be for a ninety year lease extension. Comparative properties in Sully with a long lease were valued about £280,000. The mid-range amount of ground rent was £45 billed annually. The lease terminated in 2095. Taking into account 70 years unexpired we estimated the compensation to the freeholder for the lease extension to be within £12,400 and £14,200 exclusive of fees.
Mr and Mrs. E Jones owned a first floor flat in Sully in April 2012. We are asked if we could shed any light on how much (roughly) compensation to the landlord would be for a ninety year lease extension. Comparable flats in Sully with a long lease were valued about £223,400. The mid-range amount of ground rent was £60 billed per annum. The lease lapsed on 14 February 2084. Given that there were 59 years as a residual term we approximated the premium to the landlord to extend the lease to be between £27,600 and £31,800 exclusive of expenses.