It’s a harsh truth that a Totnes residential lease is a wasting asset. As the lease term diminishes so does the value of the property. The extent of this is not fully appreciated in the early years due to the reduction being disguised by increases in the Totnes 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 slips lower than 80 years - otherwise a higher amount will be due. The majority of leasehold owners in Totnes will be able to extend under the legislation; however a lawyer should be able to clarify whether you qualify for an extension. In some cases you may not qualify. There are also strict deadlines and procedures to be adhered to once the process has commenced and you will need to be guided by your conveyancing solicitor for the duration of the formalities.
It is conventional wisdom that a property with more than one hundred years remaining is worth approximately the same as a freehold. Where an further ninety years added to any lease with more than 35 years unexpired, the premises will be equivalent in value to a freehold for decades to come.
| 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. |
| 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. |
| 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. |
Engaging our service gives you better control over the value of your Totnes leasehold, as your property will be more valuable and saleable in terms of lease length should you want to sell. The lawyers that we work with have a in-depth market knowledge handling many hundreds of lease extensions or freehold purchase transactions.
Aaron was the the leasehold proprietor of a conversion flat in Totnes on the market with a lease of fraction over 61 years outstanding. Aaron on an informal basis approached his landlord being a well known Bristol-based freehold company and enquired on a premium to extend the lease. The landlord indicated a willingness to extend the lease to 125 years on the basis of a new rent initially set at £100 per annum and doubled every 25 years thereafter. No ground rent would be payable on a lease extension were Aaron to invoke his statutory right. Aaron procured expert legal guidance and secured satisfactory deal informally and ending up with a market value flat.
Mr and Mrs. E Michel purchased a basement flat in Totnes in July 2010. 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. Identical premises in Totnes with 100 year plus lease were valued around £280,000. The mid-range amount of ground rent was £55 collected yearly. The lease elapsed on 28 July 2105. Considering the 79 years outstanding we estimated the premium to the landlord for the lease extension to be within £13,300 and £15,400 not including legals.
In 2014 we were contacted by Dr U Edwards who, having bought a purpose-built flat in Totnes in January 2004. We are asked if we could shed any light on how much (roughly) compensation to the landlord would be to extend the lease by a further 90 years. Similar premises in Totnes with 100 year plus lease were in the region of £193,400. The average ground rent payable was £65 invoiced annually. The lease came to a finish in 2085. Taking into account 59 years left we approximated the compensation to the freeholder to extend the lease to be within £21,900 and £25,200 not including costs.