Rye leases on residential properties are gradually decreasing in value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of your lease becomes more expensive. Legislation has been in place for sometime now allowing qualifying Rye residential leaseholders to extend the terms of long leases. Where you are a leasehold owner in Rye you should check if your lease has between 70 and ninety years left. In particular once the remaining lease term slips under 80 years, the amount payable for any lease extension sharply increases as part of the premium you will incur is what is known as a marriage value
It is conventional wisdom that a property with in excess of one hundred years unexpired lease term is worth approximately the equivalent as a freehold. Where an additional ninety years added to any lease with more than 35 years left, the residence will be worth the same as a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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 be at least 30 years plus the term of the mortgage at the outset of the mortgage. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Using our service will provide you increased control over the value of your Rye leasehold, as your property will be more valuable and marketable in respect of lease length should you wish to sell. The conveyancing solicitors that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Last year Logan, started to get close to the 80-year threshold with the lease on his purpose- built apartment in Rye. Having bought his property two decades ago, the unexpired term was of no relevance. Fortunately, he noticed he would soon be paying an inflated amount for a lease extension. Logan was able to extend his lease just under the wire last April. Logan and the freeholder via the management company ultimately settled on sum of £6,000 . If the lease had slipped lower than 80 years, the amount would have increased by a minimum £950.
In 2014 we were approached by Mrs Molly David who, having was assigned a lease of a one bedroom apartment in Rye in November 2007. We are asked if we could approximate the premium could be for a ninety year lease extension. Identical homes in Rye with 100 year plus lease were worth £210,000. The mid-range amount of ground rent was £50 invoiced every twelve months. The lease came to a finish on 23 June 2106. Taking into account 80 years outstanding we estimated the premium to the freeholder to extend the lease to be between £8,600 and £9,800 exclusive of expenses.
Last month we were called by Mrs P Roberts , who was assigned a lease of a ground floor flat in Rye in October 1995. The dilemma was if we could estimate the price would be to extend the lease by a further 90 years. Identical premises in Rye with an extended lease were valued around £275,000. The average amount of ground rent was £45 billed quarterly. The lease lapsed on 8 July 2095. Considering the 69 years left we estimated the premium to the landlord to extend the lease to be between £12,400 and £14,200 plus legals.