Unfortunately that a Babbacombe residential lease is a deteriorating asset. The lease value drops in proportion to its lease length. The extent of this is taken for granted in the first few years due to the reduction being disguised by increases in the Babbacombe property prices.Once your lease nears 85ish years, you need to start thinking about a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease slips below 80 years - otherwise a higher premium will be payable. The majority of flat owners in Babbacombe will be able to extend under the legislation; however a conveyancer should be able to clarify whether you are eligibility. In some situations you may not be entitled. There are also strict deadlines and procedures to follow once the process is initiated and you will need to be guided by your lawyer throughout the formalities.
Leasehold properties in Babbacombe with over 100 years outstanding on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such situations there is often little upside in buying the reversionary interest unless savings on ground rent and service charges merit 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. |
| Bank of Scotland | 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
The lawyers that we work with procure Babbacombe 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.
Luke owned a 2 bedroom apartment in Babbacombe on the market with a lease of just over 72 years unexpired. Luke on an informal basis contacted his landlord a well known London-based freehold company and enquired on a premium to extend the lease. The landlord was keen to grant an extension on non-statutory terms taking the lease to 125 years on the basis of a new rent initially set at £200 per annum and doubled every twenty five years thereafter. No ground rent would be payable on a lease extension were Luke to exercise his statutory right. Luke procured expert legal guidance and was able to make an informed decision and handle with the matter and readily saleable.
Last Spring we were phoned by Mr and Mrs. L Garcia , who was assigned a lease of a ground floor flat in Babbacombe in April 1996. The dilemma was if we could approximate the price would be to extend the lease by a further 90 years. Similar residencies in Babbacombe with an extended lease were in the region of £254,200. The mid-range ground rent payable was £60 billed annually. The lease termination date was in 2077. Having 51 years outstanding we estimated the premium to the landlord to extend the lease to be between £43,700 and £50,600 not including legals.
In 2010 we were phoned by Mr and Mrs. L Mason who, having purchased a garden flat in Babbacombe in August 2004. We are asked if we could approximate the premium would likely be to extend the lease by an additional years. Identical premises in Babbacombe with 100 year plus lease were worth £215,600. The average ground rent payable was £45 billed yearly. The lease ended on 4 September 2088. Given that there were 62 years remaining we approximated the compensation to the landlord for the lease extension to be within £18,100 and £20,800 not including expenses.