It’s a harsh certainty that a Kensington residential lease is a wasting asset. The lease value drops in proportion to its lease length. The extent of this is taken for granted in the first few years due to the depreciation being disguised by increases in the Kensington property market.Once your lease gets to 85ish years, you need to start considering a lease extension. If lease term falls under 80 years, you will then be required to pay half of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. The marriage fee is the amount of additional value that a lease extension will add the property Most leasehold owners in Kensington will be able to extend under the legislation; however a conveyancer will be able to confirm if you are eligibility. In some cases you may not be entitled. There are also strict deadlines and procedures to follow once the process is initiated and you will need to be guided by your conveyancing solicitor from beginning to end of the formalities.
It is conventional wisdom that a residential leasehold with in excess of 100 years remaining is worth approximately the same as a freehold. Where an additional ninety years added to any lease with more than 30 years remaining, the residence will be worth the same as 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. |
| 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; |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| 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. |
Irrespective of whether you are a tenant or a freeholder in Kensington,the lease extension solicitors that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Kensington valuers.
Sebastian owned a high value flat in Kensington on the market with a lease of a little over fifty eight years left. Sebastian informally approached his freeholder being a well known local-based freehold company for a lease extension. The freeholder indicated a willingness to extend the lease to 125 years subject to an increased rent to £200 annually. No ground rent would be due on a lease extension were Sebastian to exercise his statutory right. Sebastian obtained expert advice and was able to make a more informed decision and handle with the matter and ending up with a market value flat.
Last Summer we were contacted by Dr C Morgan , who bought a one bedroom flat in Kensington in November 2009. We are asked if we could approximate the compensation to the landlord would be to extend the lease by 90 years. Comparative premises in Kensington with 100 year plus lease were worth £183,600. The average ground rent payable was £65 billed annually. The lease lapsed on 2 July 2081. Taking into account 57 years unexpired we approximated the premium to the freeholder to extend the lease to be within £28,500 and £33,000 exclusive of professional charges.
An example of a Lease Extension matter before the tribunal for a Kensington residence is 93 Oakwood Court in June 2010. the LVT determined that the premium to be paid for the new lease was £492,083, This case related to 1 flat. The number of years remaining on the existing lease(s) was 37.79 years.