Unfortunately that a Sipson residential lease is a deteriorating asset. The lease value drops in proportion to its lease length. The extent of this is not fully appreciated in the early years due to the depreciation being disguised by increases in the Sipson property prices.Once your lease gets to 85ish years, you should start thinking about a lease extension. If lease term drops below 80 years, you will then be required to pay 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 The majority of flat owners in Sipson will be able to extend under the legislation; however a conveyancer should be able to confirm if you qualify for an extension. In some situations you may not be entitled. There are also strict timeframes and procedures to be adhered to once the process has commenced and you will need to be guided by your lawyer from beginning to end of the formalities.
It is conventional wisdom that a property with over one hundred years unexpired lease term is worth roughly the same as a freehold. Where an additional 90 years added to any lease with more than 35 years unexpired, the premises will be equivalent in value to a freehold for decades to come.
| Lender | Requirement |
|---|---|
| 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; |
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| Yorkshire 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. |
The lawyers that we work with procure Sipson 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.
Two years ago Andrew, came precariously close to the 80-year threshold with the lease on his leasehold apartment in Sipson. In buying his property 18 years ago, the unexpired term was of little interest. Thankfully, he recognised he needed to take action soon on Extending the lease. Andrew was able to extend his lease just ahead of time last January. Andrew and the freeholder via the managing agents in the end agreed on a premium of £5,000 . If the lease had fallen lower than 80 years, the amount would have gone up by at least £1,075.
Last Autumn we were phoned by Mrs E Mitchell , who was assigned a lease of a garden flat in Sipson in September 2007. We are asked if we could shed any light on how much (roughly) premium would likely be to extend the lease by ninety years. Comparable properties in Sipson with an extended lease were in the region of £270,000. The mid-range ground rent payable was £55 collected annually. The lease expired in 2100. Taking into account 75 years as a residual term we calculated the compensation to the landlord for the lease extension to be between £9,500 and £11,000 plus expenses.
An example of a Freehold Enfranchisement matter before the tribunal for a Sipson premises is 164 Nestles Avenue in October 2013. The tribunal agreed with the proposed price of £20,158 for the freehold and determined that that sum is the amount to be paid into court This case was in relation to 2 flats. The remaining number of years on the lease was 69 years.