For those whose South Molton flat is held on a long lease, the message is clear – if you do nothing, your property will eventually revert to the freeholder, leaving you empty-handed. The fewer the years remaining the less it is worth and the more it will cost to extend the lease.
It is generally accepted that a property with more than 100 years unexpired lease term is worth roughly the same as a freehold. Where an additional 90 years added to any lease with more than 30 years left, the premises will be equivalent in value to a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Chelsea 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. |
| 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. |
Retaining our service will provide you increased control over the value of your South Molton leasehold, as your property will be more valuable and marketable in relation to the lease length should you want to sell. The lawyers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
14 months ago Ethan, started to get close to the 80-year threshold with the lease on his ground floor apartment in South Molton. In buying his property two decades ago, the lease term was of no relevance. As luck would have it, it dawned on him that he would soon be paying an escalated premium for a lease extension. Ethan extended the lease just in the nick of time last August. Ethan and the freeholder via the managing agents in the end agreed on sum of £5,500 . If the lease had dipped below 80 years, the sum would have gone up by at least £1,150.
Dr C Bennett moved into a first floor flat in South Molton in August 2004. We are asked if we could shed any light on how much (approximately) compensation to the landlord could be to prolong the lease by an additional years. Comparative premises in South Molton with a long lease were in the region of £208,600. The average amount of ground rent was £60 billed per annum. The lease came to a finish on 8 October 2082. Given that there were 57 years unexpired we calculated the premium to the landlord to extend the lease to be within £30,400 and £35,200 exclusive of professional charges.
In 2014 we were approached by Ms O Martinez who, having bought a one bedroom apartment in South Molton in July 2006. The dilemma was if we could estimate the compensation to the landlord would likely be to extend the lease by 90 years. Comparable residencies in South Molton with 100 year plus lease were worth £200,000. The average ground rent payable was £50 collected monthly. The lease elapsed on 15 June 2102. Having 77 years outstanding we estimated the compensation to the freeholder to extend the lease to be within £8,600 and £9,800 plus legals.