Paignton 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 Paignton tenants have the right to extend their lease by an additional 90 years in accordance with the 1993 Leasehold Reform Act. Where you are a leasehold owner in Paignton you really ought to see if your lease has between seventy and 90 years remaining. In particular once the remaining lease term slips under 80 years, the compensation to the landlord for any lease extension sharply increases as part of the premium you will incur is what is known as a marriage value
Leasehold properties in Paignton with more than 100 years left on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such situations there is often little to be gained by buying the freehold unless savings on ground rent and maintenance charges warrant it.
| 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; |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| 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. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Retaining our service will provide you increased control over the value of your Paignton leasehold, as your property will be more valuable and saleable in terms of lease length should you wish to sell. The conveyancers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Off the back of unsuccessful negotiations with the freeholder of her leasehold flat in Paignton, Bethan commenced the lease extension process just as her lease was coming close to the critical 80-year threshold. The lease extension was concluded in November 2014. The landlord’s costs were kept to an absolute minimum.
In 2009 we were e-mailed by Mr T Simon who, having completed a basement flat in Paignton in March 2008. We are asked if we could estimate the compensation to the landlord would likely be for a 90 year lease extension. Comparative flats in Paignton with a long lease were valued around £201,200. The average ground rent payable was £55 billed every twelve months. The lease ran out on 20 September 2081. Having 56 years remaining we estimated the compensation to the landlord to extend the lease to be between £31,400 and £36,200 plus professional charges.
Mr and Mrs. U Smith owned a ground floor flat in Paignton in October 2001. We are asked if we could approximate the premium would likely be for a 90 year extension to my lease. Comparable properties in Paignton with an extended lease were worth £300,000. The mid-range ground rent payable was £50 billed every twelve months. The lease ended on 5 October 2101. Considering the 76 years left we estimated the premium to the landlord for the lease extension to be between £8,600 and £9,800 exclusive of professional charges.