Seaton leases on residential properties are gradually losing value. The shorter the remaining lease term becomes, the less it is worth – and as a result any extension of your lease gets more expensive. Legislation has been in place for sometime now which permits qualifying Seaton residential leaseholders to extend the terms of long leases. If you are a leasehold owner in Seaton you must see if your lease has between seventy and 90 years left. In particular once the remaining lease term slips under 80 years, the cost of any lease extension increases dramatically as an element of the premium you will incur is what is known as a marriage value
Leasehold properties in Seaton with in excess of one hundred years unexpired on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your property. In such situations there is often little upside in purchasing the reversionary interest unless savings on ground rent and service charges justify it.
| 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. |
| 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. |
| 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 lawyers that we work with handle Seaton 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 lawyer we work with provide it.
Trailing unsuccessful correspondence with the freeholder of her leasehold flat in Seaton, Emily commenced the lease extension process as the eighty year deadline was swiftly coming. The transaction was finalised in November 2008. The landlord’s fees were restricted to approximately 500 GBP.
In 2011 we were approached by Dr Y Williams who, having acquired a first floor apartment in Seaton in November 2009. The dilemma was if we could estimate the premium could be to prolong the lease by an additional years. Identical homes in Seaton with an extended lease were valued about £233,200. The mid-range ground rent payable was £60 collected quarterly. The lease ran out in 2087. Having 61 years outstanding we estimated the premium to the landlord to extend the lease to be within £22,800 and £26,400 plus expenses.
Mr and Mrs. K Mercier acquired a one bedroom apartment in Seaton in July 1999. The dilemma was if we could approximate the premium would be to prolong the lease by 90 years. Identical flats in Seaton with a long lease were worth £171,800. The mid-range amount of ground rent was £55 billed per annum. The lease terminated in 2076. Given that there were 50 years outstanding we estimated the compensation to the landlord to extend the lease to be between £33,300 and £38,400 not including costs.