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Main reasons to commence your Okehampton lease extension


Main reasons to start your Okehampton lease extension today:

Increase your lease and increase your Okehampton property value

Okehampton leases on residential properties are gradually losing value. if your lease has about 90 years left, you should start considering the need for a lease extension. If lease term is less than eighty years, you will then be required to pay half of the property's 'marriage value' in addition to the standard cost of the lease extension to your landlord. Marriage value is the amount of additional value that a lease extension will add to the property. Leasehold owners in Okehampton will mostly qualify for a lease extension; however It would be wise to check with a lawyer to confirm if you qualify. In some cases you may not qualify. There are prescribed timetables and steps to comply with once the process is triggered so it’s sensible to be guided by a conveyancer during the process.

An extended lease is almost the same value as a freehold

It is generally considered that a residential leasehold with in excess of one hundred years unexpired lease term is worth roughly the equivalent as a freehold. Where an further ninety years added to any lease with more than 35 years left, the premises will be equivalent in value to a freehold for many years in the future.

Banks and Building Societies may not grant a mortgage with a short lease

Mortgage companies are making their criteria more stringent and many now want flats to have at least 60 if not 70 years remaining once the mortgage has expired. Given that many flats in Okehampton were created in the 1950s, 1960s and 1970s as a result many now require lease extensions if they wish to get a mortgage.

Lender Requirement
Bank of Scotland 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.
Leeds Building Society 85 years remaining from the start of the mortgage.
Skipton Building Society 85 years from the date of completion of the mortgage

For Buy to Let cases:
- lettings must not breach any of the lessee’s covenants; and
- consent of the lessor to lettings must be obtained if necessary
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 Issuing Office (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 Issuing Office (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 1.0% 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 Issuing Office):
- 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 Issuing Office (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
- Any lease which is subject to a ground rent (or annual rent) being charged which is more than on a peppercorn basis
- Any lease which is subject to a ground rent (or annual rent) being reviewed and altered on any review basis or methodology

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- 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 1.0% 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 Issuing Office):
- 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
- A lease subject to a peppercorn ground rent (annual rent) charges

For the avoidance of doubt, any new build properties completed but not sold pre 30 June 2022 will only be acceptable if the lease conforms to the above guidance

* 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

LEASE EXTENSIONS

We require all lease extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where you become aware that it does not meet these requirements, please refer to the Issuing Office

Why use us for your lease extension in Okehampton?

Irrespective of whether you are a tenant or a landlord in Okehampton,the lease extension lawyers that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Okehampton valuers.

Okehampton Lease Extension Example Cases:

Hunter, Okehampton, Devon,

Hunter was the the leasehold proprietor of a high value flat in Okehampton being sold with a lease of a few days over 72 years remaining. Hunter informally approached his landlord being a well known local-based freehold company for a lease extension. The landlord was keen to grant an extension on non-statutory terms taking the lease to 125 years on the basis of a rise in the rent to £200 yearly. Ordinarily, ground rent would not be payable on a lease extension were Hunter to exercise his statutory right. Hunter procured expert legal guidance and secured satisfactory resolution without going to tribunal and readily saleable.

Okehampton case:

Mr and Mrs. B Morel purchased a newly refurbished apartment in Okehampton in May 2006. The question was if we could estimate the compensation to the landlord would be for a 90 year lease extension. Similar flats in Okehampton with a long lease were valued about £210,600. The mid-range amount of ground rent was £45 billed per annum. The lease finished on 16 August 2086. Having 62 years unexpired we estimated the compensation to the landlord to extend the lease to be between £18,100 and £20,800 plus professional charges.

Okehampton case:

In 2014 we were phoned by Mr and Mrs. I Peterson who, having was assigned a lease of a studio flat in Okehampton in September 1997. We are asked if we could approximate the compensation to the landlord could be for a ninety year extension to my lease. Similar homes in Okehampton with a long lease were worth £260,000. The mid-range amount of ground rent was £50 billed yearly. The lease elapsed on 28 July 2097. Given that there were 73 years left we calculated the premium to the freeholder to extend the lease to be between £9,500 and £11,000 exclusive of expenses.