It’s an underpublicised certainty that a Salcombe residential lease is a wasting asset. The lease value reduces in proportion to its lease length. The extent of this is not fully appreciated in the first few years due to the loss of value being disguised by increases in the Salcombe property market.Once your lease gets to 85ish years, you should start thinking about 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 dips below 80 years - otherwise a higher amount will be payable. Most flat owners in Salcombe will be able to extend under the legislation; however a lawyer will be able to clarify whether you qualify for an extension. In some cases you may not qualify. There are also strict timetables and procedures to be adhered to once the process has commenced and you will need to be guided by your conveyancer for the duration of the process.
Leasehold properties in Salcombe with in excess of 100 years remaining on the lease are often referred to as ‘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 estate charges merit it.
| Lender | Requirement |
|---|---|
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. |
| 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 |
| 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 conveyancer we work with provide it.
Sebastian owned a 2 bedroom flat in Salcombe on the market with a lease of a few days over 72 years unexpired. Sebastian on an informal basis spoke with his landlord a well known Bristol-based freehold company and enquired on a premium to extend the lease. The freeholder was prepared to grant an extension on non-statutory terms taking the lease to 125 years subject to an increased rent to £100 annually. No ground rent would be payable on a lease extension were Sebastian to exercise his statutory right. Sebastian obtained expert advice and was able to make an informed decision and deal with the matter and sell the flat.
Last July we were e-mailed by Mr and Mrs. J Lewis , who was assigned a lease of a garden flat in Salcombe in August 2007. The question was if we could approximate the premium could be to prolong the lease by ninety years. Comparable flats in Salcombe with a long lease were worth £280,000. The average ground rent payable was £55 billed quarterly. The lease end date was on 24 April 2103. Given that there were 78 years unexpired we calculated the compensation to the landlord for the lease extension to be between £13,300 and £15,400 exclusive of professional charges.
Last Winter we were called by Ms U White , who was assigned a lease of a one bedroom flat in Salcombe in May 1999. We are asked if we could approximate the compensation to the landlord could be for a ninety year extension to my lease. Similar premises in Salcombe with a long lease were worth £191,000. The mid-range ground rent payable was £65 collected per annum. The lease termination date was in 2083. Taking into account 58 years remaining we approximated the premium to the freeholder for the lease extension to be between £23,800 and £27,400 plus expenses.