Exmouth leases on residential properties are gradually diminishing in value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of your lease gets more expensive. Legislation has been in place for sometime now allowing qualifying Exmouth residential leaseholders to extend the terms of long leases. If you are a leasehold owner in Exmouth you must see if your lease has between seventy and ninety years remaining. There are compelling reasons why a Exmouth leaseholder with a lease having around 80 years unexpired should take steps to make sure that a lease extension is put in place without delay
Leasehold properties in Exmouth with in excess of 100 years outstanding on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such situations there is often little upside in buying the freehold unless savings on ground rent and maintenance charges justify 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. |
| 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. |
| 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. |
The lawyers that we work with handle Exmouth 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.
Trailing protracted discussions with the freeholder of her purpose-built flat in Exmouth, Isabelle commenced the lease extension process as the 80 year threshold was quickly approaching. The transaction completed in July 2005. The freeholder’s charges were kept to an absolute minimum.
In 2010 we were contacted by Mr O Sharif who, having moved into a purpose-built flat in Exmouth in January 1995. We are asked if we could shed any light on how much (approximately) premium could be to extend the lease by ninety years. Comparative flats in Exmouth with 100 year plus lease were worth £275,000. The average ground rent payable was £55 collected annually. The lease finished in 2103. Given that there were 77 years unexpired we approximated the premium to the landlord for the lease extension to be between £13,300 and £15,400 not including costs.
In 2012 we were e-mailed by Dr L Lewis who, having took over the lease of a purpose-built apartment in Exmouth in February 2004. The dilemma was if we could approximate the compensation to the landlord would likely be to extend the lease by 90 years. Comparative properties in Exmouth with an extended lease were worth £183,600. The average ground rent payable was £65 invoiced quarterly. The lease concluded on 13 November 2083. Given that there were 57 years unexpired we calculated the compensation to the freeholder for the lease extension to be between £28,500 and £33,000 not including professional charges.