Bude leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of the lease becomes more expensive. Legislation has been in place for sometime now which permits qualifying Bude residential leaseholders to extend the terms of long leases. If you are a leasehold owner in Bude you should check if your lease has between seventy and ninety years left. In particular once the remaining lease term slips under 80 years, the amount payable for any lease extension increases dramatically as an element of the premium you pay is what is known as a marriage value
Leasehold residencies in Bude 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 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; |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. |
| 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. |
Regardless of whether you are a tenant or a freeholder in Bude,the lease extension experts that we work with will always be happy to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Bude valuers.
Following protracted negotiations with the freeholder of her two bedroom flat in Bude, Jessica commenced the lease extension process just as her lease was nearing the crucial eighty-year mark. The lease extension was finalised in January 2005. The freeholder’s costs were restricted to below 600 GBP.
In 2014 we were e-mailed by Mr Evan Dupont who, having moved into a purpose-built apartment in Bude in January 1998. We are asked if we could approximate the compensation to the landlord would be for a ninety year lease extension. Identical homes in Bude with 100 year plus lease were valued around £174,200. The mid-range ground rent payable was £55 invoiced quarterly. The lease lapsed on 20 June 2076. Considering the 51 years left we calculated the compensation to the freeholder to extend the lease to be within £31,400 and £36,200 plus costs.
In 2012 we were e-mailed by Mr and Mrs. N Brooks who, having acquired a basement apartment in Bude in March 2000. We are asked if we could estimate the premium would be to prolong the lease by ninety years. Similar premises in Bude with 100 year plus lease were valued about £285,000. The mid-range ground rent payable was £45 billed quarterly. The lease came to a finish on 25 March 2096. Taking into account 71 years unexpired we approximated the premium to the freeholder to extend the lease to be between £12,400 and £14,200 exclusive of professional charges.