Brixham Lease Extension - Free Consultation

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Why you should start your Brixham lease extension


Main reasons to start your Brixham lease extension today:

Increase your lease and increase your Brixham property value

When it comes to long leasehold premises in Brixham, you are in fact renting it for a certain period of time. These days flat leases typically tend to be for 99 years or 125. Even though this may appear like a long period of time, you should consider a lease extension sooner as opposed to later. Accepted thinking is that the shorter the lease is the cost of extending the lease increases markedly particularly when there are less than eighty years remaining. Residents in Brixham with a lease nearing 81 years unexpired should seriously think of extending it sooner than later. When the lease term has below eighty years remaining, under the relevant statute the freeholder is entitled to calculate and charge a larger premium, assessed on a technical multiplication, strangely termed as “marriage value” which is payable.

An extended lease has roughly the same value as a freehold

It is conventional wisdom that a residential leasehold with over 100 years remaining is worth approximately the equivalent as a freehold. Where an further 90 years added to any lease with more than 30 years left, the premises will be equivalent in value to a freehold for many years ahead.

Mortgage lenders may not finance a property with a short lease

Almost all mortgage lenders require a lengthy amount of time left on a leasehold property before they will contemplate providing a mortgage on it. Even if you don't need a mortgage, you should bear in mind that it is reasonable to assume that someone wanting to acquire your property in the future might well do, so if they are unable to get a mortgage, then the financial worth of your property could be adversely impacted. Since 2008 the majority of mortgage lenders have increased the required minimum lease length that they are prepared to grant a mortgage on

Lender Requirement
Barclays plc Mortgage term plus 25 years provided that leases of less than 85 years are be referred to us for approval.
Leeds Building Society 85 years remaing from the start of the mortgage.
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.
The Mortgage Works Minimum unexpired lease term is 70 years with 30 years remaining at the end of the mortgage term.
Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:

Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer

New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer

Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.

SECOND HAND PROPERTIES

Unacceptable - advise Originations (Will be declined):
- Unexpired lease term less than 70 years
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period less than or equal to 5 years

Refer to Originations (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 70 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 0.5% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Originations):
- Unexpired lease term greater than 85 years
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI

NEW BUILD PROPERTIES (includes office conversions)

Unacceptable - advise Originations (Will be declined):
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house
- Starting Ground Rent greater than 0.1% of the property value
- Ground Rent review period less than or equal to 5 years
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI

Refer to Originations (Valuer will consider any impact on valuation figure and marketability):
- Ground Rent is linked to any indices greater than RPI
- Ground Rent is linked to the value of the building*
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 0.5% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Originations):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- Starting Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than 5 years
- Ground Rent escalation less than or equal to RPI

* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty 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.

Get in touch with one of our Brixham lease extension solicitors or enfranchisement solicitors

The lawyers that we work with handle Brixham 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 lawyer we work with provide it.

Brixham Lease Extension Case Studies:

Samuel, Brixham, Devon

Half a year ago Samuel, started to get near to the 80-year mark with the lease on his first floor flat in Brixham. Having bought his home two decades ago, the unexpired term was of little importance. by good luck, it dawned on him that he needed to take action soon on Extending the lease. Samuel arranged for a lease extension at the eleventh hour in September. Samuel and the freeholder via the management company subsequently settled on sum of £6,000 . If the lease had gone below eighty years, the sum would have become more exhorbitant by a minimum £1,075.

Brixham case:

Mrs Abbie Harris bought a studio flat in Brixham in February 2004. We are asked if we could approximate the price could be for a ninety year lease extension. Comparable homes in Brixham with an extended lease were valued about £235,200. The average ground rent payable was £45 collected quarterly. The lease came to a finish in 2087. Given that there were 66 years remaining we approximated the premium to the landlord for the lease extension to be between £12,400 and £14,200 not including costs.

Brixham case:

In 2012 we were phoned by Mr and Mrs. F Green who, having was assigned a lease of a basement flat in Brixham in October 2004. We are asked if we could estimate the premium would likely be for a 90 year extension to my lease. Identical flats in Brixham with a long lease were worth £275,000. The mid-range ground rent payable was £55 invoiced per annum. The lease finished on 23 November 2098. Given that there were 77 years left we calculated the compensation to the landlord to extend the lease to be between £13,300 and £15,400 not including fees.