For anyone whose Teignmouth home is held on a long lease, the message is clear – if no remedial action is taken, the property will eventually revert to your landlord, leaving you empty-handed. The shorter the lease 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 one hundred years remaining is worth approximately the equivalent as a freehold. Where an further 90 years added to all but the shortest lease, the premises will be worth the same as a freehold for many years in the future.
| 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; |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
| 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. |
Retaining our service will provide you better control over the value of your Teignmouth leasehold, as your property will be more valuable and marketable in terms of lease length should you decide to sell. The conveyancers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
During the course of the last few months Callum, came dangerously close to the eighty-year mark with the lease on his studio apartment in Teignmouth. In buying his flat two decades ago, the length of the lease was of little concern. As luck would have it, it dawned on him that he needed to take steps soon on a lease extension. Callum was able to extend his lease at the eleventh hour in September. Callum and the freeholder subsequently agreed on a premium of £6,000 . If he had missed the deadline, the price would have escalated by a minimum £975.
In 2011 we were contacted by Mr D Thomas who, having moved into a purpose-built apartment in Teignmouth in August 2005. The question was if we could shed any light on how much (approximately) price could be for a ninety year extension to my lease. Comparative homes in Teignmouth with 100 year plus lease were valued about £248,000. The mid-range amount of ground rent was £65 billed quarterly. The lease finished on 18 March 2088. Taking into account 63 years as a residual term we calculated the compensation to the freeholder for the lease extension to be between £20,000 and £23,000 exclusive of costs.
Dr Jasmine Morgan was assigned a lease of a one bedroom flat in Teignmouth in July 1995. The question was if we could approximate the price would be to extend the lease by 90 years. Identical homes in Teignmouth with an extended lease were worth £181,600. The average amount of ground rent was £55 invoiced yearly. The lease terminated on 17 April 2077. Taking into account 52 years outstanding we approximated the premium to the freeholder for the lease extension to be between £30,400 and £35,200 plus costs.