The value of Totnes leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The expense of a lease extension can increase materialy once the remaining term is below than eighty years
It is generally considered that a residential leasehold with more than one hundred years unexpired lease term is worth roughly the equivalent as a freehold. Where an further ninety years added to all but the shortest lease, the residence will be equivalent in value to a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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; |
| 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 30 years plus the term of the mortgage at the outset 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 conveyancers that we work with procure Totnes 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.
In 2014 Leon, started to get close to the 80-year threshold with the lease on his first floor apartment in Totnes. In buying his home two decades ago, the lease term was of minimal bearing. Fortunately, he recognised he needed to take steps soon on Extending the lease. Leon arranged for a lease extension at the eleventh hour in June. Leon and the landlord who owned the flat above subsequently settled on sum of £5,500 . If the lease had fallen below eighty years, the price would have increased by at least £1,000.
Dr Joseph Bertrand moved into a basement apartment in Totnes in February 1996. We are asked if we could estimate the compensation to the landlord would likely be to extend the lease by a further 90 years. Identical flats in Totnes with an extended lease were valued about £250,000. The mid-range amount of ground rent was £50 invoiced monthly. The lease lapsed in 2096. Having 70 years outstanding we approximated the premium to the landlord to extend the lease to be between £9,500 and £11,000 plus legals.
Last Autumn we were approach by Mr and Mrs. C Anderson , who owned a one bedroom flat in Totnes in October 2005. The dilemma was if we could shed any light on how much (approximately) premium would be to prolong the lease by ninety years. Comparable residencies in Totnes with a long lease were worth £246,800. The average amount of ground rent was £60 invoiced quarterly. The lease end date was in 2076. Taking into account 50 years outstanding we estimated the premium to the freeholder to extend the lease to be within £44,700 and £51,600 plus expenses.