The market value of a leasehold property in Honiton is impacted by how long the lease has left to run. If it is near to or fewer than 80 years you should expect problems on re-sale, so it is advisable to arrange for a lease extension prior to buying. It is ideal to start the process of extending the lease is when a lease still has 82 years to run so that formalities can be concluded prior to the 80 year mark. Statute enables Honiton qualifying lessees to obtain a lease extension of 90 years on top of the remaining length of the lease at a peppercorn rent (that is, rent free). The intention of the valuation is to determine the premium payable by the lessee to the freeholder for the acquisition of the lease extension.
Leasehold residencies in Honiton with in excess of 100 years remaining on the lease are often regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such circumstances there is often little upside in buying the reversionary interest unless savings on ground rent and maintenance 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. |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| 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 handle Honiton 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.
Reuben owned a 2 bedroom apartment in Honiton on the market with a lease of fraction over 59 years remaining. Reuben informally approached his landlord a well known Bristol-based freehold company for a lease extension. The freeholder indicated a willingness to extend the lease to 125 years on the basis of a new rent initially set at £200 per annum and doubled every 25 years thereafter. Ordinarily, ground rent would not be payable on a lease extension were Reuben to invoke his statutory right. Reuben obtained expert advice and was able to make a more informed judgement and handle with the matter and sell the property.
Last Winter we were contacted by Mr and Mrs. G Bernard , who was assigned a lease of a purpose-built flat in Honiton in August 1997. The question was if we could estimate the compensation to the landlord would likely be for a 90 year extension to my lease. Identical properties in Honiton with an extended lease were worth £200,000. The average ground rent payable was £50 invoiced monthly. The lease came to a finish on 7 July 2102. Having 77 years remaining we approximated the premium to the landlord for the lease extension to be between £8,600 and £9,800 not including professional charges.
In 2013 we were e-mailed by Mr and Mrs. Y Davis who, having bought a newly refurbished flat in Honiton in July 1998. We are asked if we could shed any light on how much (roughly) compensation to the landlord could be for a 90 year lease extension. Identical premises in Honiton with 100 year plus lease were in the region of £260,200. The average amount of ground rent was £65 collected annually. The lease elapsed in 2091. Considering the 66 years unexpired we estimated the compensation to the freeholder to extend the lease to be between £15,200 and £17,600 exclusive of legals.