It’s an underpublicised truth that a Honiton residential lease is a deteriorating asset. As the lease term diminishes so does the value of the property. The extent of this is not fully appreciated in the early years due to the reduction being disguised by increases in the Honiton property market.Where your lease has approximately ninety years left, you need to start considering 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 under 80 years - otherwise a higher premium will be due. The majority of leasehold owners in Honiton will be able to extend under the legislation; however a lawyer will be able to confirm whether you qualify for an extension. In some situations you may not be entitled. There are also strict deadlines and procedures to follow once the process has commenced and you will need to be guided by your conveyancer throughout the process.
Leasehold properties in Honiton with in excess of 100 years unexpired on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such situations there is often little to be gained by purchasing the freehold unless savings on ground rent and service charges warrant 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; |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Coventry Building Society | 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. |
Regardless of whether you are a tenant or a landlord in Honiton,the lease extension solicitors that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Honiton valuers.
After protracted discussions with the landlord of her basement flat in Honiton, Lucy commenced the lease extension process just as her lease was coming close to the all-important 80-year threshold. The transaction was finalised in April 2015. The freeholder’s costs were restricted to slightly above 450 pounds.
In 2009 we were contacted by Mr and Mrs. F Petit who, having was assigned a lease of a newly refurbished apartment in Honiton in March 1996. We are asked if we could estimate the premium could be to extend the lease by ninety years. Identical flats in Honiton with a long lease were worth £285,000. The average amount of ground rent was £45 invoiced quarterly. The lease came to a finish on 8 February 2096. Taking into account 71 years outstanding we approximated the compensation to the freeholder for the lease extension to be between £12,400 and £14,200 exclusive of costs.
In 2009 we were approached by Mr Henry Brown who, having took over the lease of a ground floor apartment in Honiton in May 2000. The question was if we could shed any light on how much (approximately) compensation to the landlord would likely be to prolong the lease by ninety years. Comparative homes in Honiton with a long lease were in the region of £225,800. The average amount of ground rent was £60 invoiced per annum. The lease elapsed on 18 March 2085. Considering the 60 years left we estimated the premium to the freeholder for the lease extension to be between £23,800 and £27,400 exclusive of fees.