It’s an underpublicised certainty that a Salcombe residential lease is a wasting asset. The lease value drops in proportion to its lease length. The extent of this is taken for granted in the early years due to the loss of value being disguised by increases in the Salcombe property market.Where your lease has approximately 90 years left, you should start thinking about a lease extension. If the number of years remaining falls below 80 years, you will end up paying half of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of additional value that a lease extension will add the property Most flat owners in Salcombe will be able to extend under the legislation; however a conveyancing solicitor should be able to confirm if you qualify for an extension. In some situations you may not qualify. There are also strict timetables and procedures to follow once the process is initiated and you will need to be guided by your lawyer throughout the formalities.
It is conventional wisdom that a property with in excess of 100 years unexpired lease term is worth approximately the equivalent as a freehold. Where an further ninety years added to all but the shortest lease, the property will be equivalent in value to a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| 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. |
| Halifax | Minimum 70 years from the date 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. |
| 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. |
The conveyancers that we work with handle Salcombe 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 conveyancing solicitor we work with provide it.
After unsuccessful correspondence with the freeholder of her one bedroom flat in Salcombe, Jasmine initiated the lease extension process as the eighty year mark was rapidly coming. The transaction was concluded in February 2007. The freeholder’s charges were kept to an absolute minimum.
Last year we were contacted by Dr Paige Collins , who moved into a one bedroom flat in Salcombe in June 1997. The dilemma was if we could shed any light on how much (roughly) price would likely be for a 90 year lease extension. Identical homes in Salcombe with 100 year plus lease were in the region of £166,400. The mid-range ground rent payable was £60 invoiced every twelve months. The lease terminated on 3 November 2079. Taking into account 54 years left we estimated the compensation to the landlord for the lease extension to be between £32,300 and £37,400 plus expenses.
In 2013 we were contacted by Dr S Ramírez who, having was assigned a lease of a purpose-built apartment in Salcombe in June 2003. The question was if we could shed any light on how much (approximately) compensation to the landlord would likely be to extend the lease by ninety years. Comparative flats in Salcombe with an extended lease were worth £232,800. The average ground rent payable was £45 invoiced quarterly. The lease concluded in 2090. Having 65 years outstanding we calculated the compensation to the freeholder for the lease extension to be within £13,300 and £15,400 exclusive of fees.