Bembridge 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 the lease gets more expensive. Legislation has been in place for sometime now allowing qualifying Bembridge residential leaseholders to extend the terms of long leases. If you are a leasehold owner in Bembridge you must see if your lease has between seventy and ninety years left. In particular once the remaining lease term slips under 80 years, the compensation to the landlord for any lease extension increases dramatically as part of the premium you will incur is what is known as a marriage value
Leasehold residencies in Bembridge with in excess of 100 years remaining on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your property. In such situations there is often little upside in purchasing the freehold unless savings on ground rent and maintenance charges justify 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; |
| 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. |
| 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The lawyers that we work with undertake Bembridge 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 conveyancer we work with provide it.
Half a year ago Tommy, started to get near to the 80-year threshold with the lease on his purpose- built flat in Bembridge. Having purchased his flat 18 years previously, the length of the lease was of no concern. As luck would have it, he realised he would imminently be paying an inflated amount for a lease extension. Tommy was able to extend his lease at the eleventh hour in April. Tommy and the freeholder via the management company in the end agreed on sum of £6,000 . If the lease had slipped to less than 80 years, the sum would have escalated by at least £1,150.
Last March we were contacted by Ms M Martin , who moved into a ground floor flat in Bembridge in September 2010. The dilemma was if we could shed any light on how much (roughly) premium would likely be to extend the lease by an additional years. Identical homes in Bembridge with an extended lease were worth £257,800. The average amount of ground rent was £65 invoiced quarterly. The lease came to a finish on 22 August 2090. Considering the 65 years unexpired we approximated the premium to the landlord for the lease extension to be within £18,100 and £20,800 plus fees.
In 2011 we were e-mailed by Mrs Lily Jones who, having purchased a newly refurbished flat in Bembridge in June 1998. The question was if we could approximate the premium would likely be to prolong the lease by ninety years. Comparable flats in Bembridge with 100 year plus lease were worth £191,400. The mid-range ground rent payable was £55 billed yearly. The lease lapsed on 2 January 2079. Given that there were 54 years left we estimated the premium to the freeholder to extend the lease to be between £34,200 and £39,600 not including legals.