The market value of Babbacombe leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The cost of extending the lease can increase substantially once the unexpired lease term is less than eighty years
It is conventional wisdom that a property with more than 100 years unexpired lease term is worth approximately the same as a freehold. Where an additional ninety years added to any lease with more than 45 years remaining, the residence will be equivalent in value to a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Godiva Mortgages | 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. |
| 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. |
Retaining our service gives you increased control over the value of your Babbacombe leasehold, as your property will be more valuable and saleable in respect of lease length should you want to sell. The conveyancers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
14 months ago Finley, started to get close to the eighty-year mark with the lease on his one bedroom flat in Babbacombe. In buying his home twenty years previously, the unexpired term was of little relevance. Thankfully, it dawned on him that he needed to take steps soon on Extending the lease. Finley arranged for a lease extension just ahead of time in July. Finley and the landlord who owned the flat above subsequently agreed on an amount of £5,000 . If he not met the deadline, the amount would have escalated by a minimum £950.
Mrs E Allen acquired a one bedroom apartment in Babbacombe in February 1999. We are asked if we could estimate the premium would be for a ninety year lease extension. Identical flats in Babbacombe with a long lease were in the region of £191,000. The average amount of ground rent was £65 invoiced every twelve months. The lease ended on 21 February 2084. Given that there were 58 years left we estimated the compensation to the landlord for the lease extension to be between £23,800 and £27,400 not including expenses.
In 2011 we were phoned by Dr O Allen who, having purchased a studio flat in Babbacombe in August 2008. We are asked if we could shed any light on how much (approximately) premium could be to extend the lease by an additional years. Similar flats in Babbacombe with 100 year plus lease were worth £250,000. The mid-range ground rent payable was £50 billed per annum. The lease elapsed on 10 June 2095. Given that there were 69 years unexpired we approximated the compensation to the freeholder to extend the lease to be within £9,500 and £11,000 plus fees.