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Why you should commence your Notting Hill lease extension


Top reasons for lease extension now:

Increase your lease and increase your Notting Hill property value

Owning a apartment usually means owning a lease of the property, this is a ‘time-limited’ interest becoming shorter every day. your lease will usually be granted for a set period of time , usually 99 or 125 years, although we have come across longer and shorter terms in Notting Hill. Inevitably, the period of lease left reduces as time goes by. This is often overlooked and only raises itself as an issue when the residence has to be disposed of or re-mortgaged. The shorter the lease the less it is worth and the more expensive it will be to extend the lease. Qualifying long lease owners in Notting Hill have the right to extend the lease for an additional ninety years under the 1993 Leasehold Reform Act. Please give careful consideration before delaying your Notting Hill lease extension. Holding off that expense now likely increases the price you will ultimately incur for a lease extension

An extended lease has roughly the same value as a freehold

Leasehold premises in Notting Hill with over 100 years remaining on the lease are sometimes referred to as ‘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 buying the reversionary interest unless savings on ground rent and estate charges merit it.

Mortgage lenders may decide not to finance a property on a short lease

Banks and Building Societies have specific criteria when loaning monies charged on leasehold property. Some will simply not lend at all once an unexpired lease term drops under a certain unexpired lease term. Many Mortgage lenders will not regard property with an unexpired term of less than 75 years as acceptable security. As well as this being important when selling, it is also relevant where you are intending to remortgage your Notting Hill property.

Lender Requirement
Bank of Scotland Minimum 70 years from the date of the mortgage.
Birmingham Midshires Minimum 70 years from the date of the mortgage.
Nationwide Building Society - Our minimum unexpired lease term is 55 years, except where lending is over 85% of the purchase price/valuation on a second hand flat, in which case our minimum unexpired term is 90 years.
- There must be at least 30 years remaining at the end of the mortgage term (regardless of the length of lease at the start).

Where the unexpired lease term is different to that recorded on the mortgage offer, the following clarifies if we need to be informed:

Second hand property:
- If the unexpired lease term on the offer is 85 years or more - only advise us if the actual lease term is less than 85 years
- if the unexpired lease term on the offer is less than 85 years – advise us if the actual lease term is different than reported
- For equity share applications - advise us if the actual lease term is different than reported on the offer
- Where lending is over 85% of the purchase price/valuation on a second hand flat and the unexpired lease term on the offer is 90 years or more - only advise us if the actual lease term is less than 90 years.

New build property:
- If the unexpired lease term stated on the offer is 125 years (flat) / 250 years (house) or more - only advise us if the actual lease term is less than 125 years (flat) / 250 years (house)
- For equity share applications - always advise us if the actual lease term is different than reported on the offer

Lease terms such as ground rent and event fees must be reasonable at all times during the term of the lease and adhere to our requirements below. If you’re unsure as to whether the terms of a lease are unreasonable or onerous, please refer the details to us in plain English for Valuer consideration. If the potentially onerous terms are in relation to the ground rent please include the current ground rent figure per annum, how often it will be reviewed and the price structure it will be reviewed against. See the guidance below.

SECOND HAND PROPERTIES

Unacceptable - advise Issuing Office (Will be declined):
- Unexpired lease term less than 55 years
- Unexpired lease term less than 90 years where we are lending more than 85% of the purchase price/valuation on a second hand flat
- Less than 30 years remaining at the end of the mortgage term
- Ground Rent greater than 0.5% of the property value
- Ground Rent doubles less than every 20 years (e.g. doubles every 5, 10 or 15 years) - acceptable if doubles every 20 years or more
- Ground Rent is compounded RPI
- Ground Rent review period is less than or equal to 5 years

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Unexpired lease term is 55 to 85 years
- Ground Rent greater than 0.1% and less than or equal to 0.5% of the property value
- Ground Rent escalation is linked to any indices greater than RPI
- Ground Rent escalation is linked to the value of the building*
- Ground Rent review period is greater than 5 and less than 10 years
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial, etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1% of property value p/a (please provide details of what the charges cover)
- Anything that appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than 85 years (Minimum 90 years where we are lending more than 85% of the purchase price/valuation on a second hand flat)
- Ground Rent less than or equal to 0.1% of the property value
- Ground Rent review period greater than or equal to 10 years
- Ground Rent escalation less than or equal to RPI

NEW BUILD PROPERTIES (includes office conversions)

Unacceptable - advise Issuing Office (Will be declined)
- Unexpired lease term less than 125 years on a new build flat or less than 250 years on a new build house (does not apply to Shared Ownership)
- Any lease which is subject to a Ground Rent (or Annual Rent) being charged which is more than on a peppercorn basis
- Any lease which is subject to a Ground Rent (or Annual Rent) being charged which is more than on a peppercorn basis

Refer to Issuing Office (Valuer will consider any impact on valuation figure and marketability):
- Event clauses exist for normal use e.g. changing the carpet, installing a TV aerial etc
- Estate Rent Charges greater than £500 p/a (please provide details of what the charges cover)
- Service Charges greater than 1% of property value p/a (please provide details of what the charges cover)
- Anything else appears onerous, unusual or out of the ordinary

Acceptable (no requirement to advise Issuing Office):
- Unexpired lease term greater than or equal to 125 years on a new build flat or greater than or equal to 250 years on a new build house
- A lease subject to a peppercorn Ground Rent (Annual Rent) charges

For the avoidance of doubt, any New Build properties completed but not sold pre-30 June 2022 will only be acceptable if the Lease conforms to the above guidance.

* Where the Ground Rent escalation is linked to the value of the building, please provide the following:
- How is the value of the block/unit currently calculated and if the assessment relates to the block(s), how is the Ground Rent calculated/apportioned per property?
- The current valuation and Ground Rent for each unit
- What is the mechanism for future valuations of the block and how is the Ground Rent calculated/apportioned?
- What is the right of appeal? And is this a documented process within the lease?
- Who bears the cost of the valuation (and appeal) process?
- Confirmation the review period is not less than twenty years.

Lease Extensions

We require all Lease Extensions to be completed under the Leasehold Reform Housing and Urban Development Act 1993 and to meet the above criteria as a minimum. Where you become aware that it does not meet these requirements, please refer to Issuing Office.
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
Virgin 85 years at the time of completion. If it's less, we require it to be extended on or before completion.

Why use us for your lease extension in Notting Hill?

Lease extensions in Notting Hill can be a difficult process. We recommend you get professional help from a lawyer and surveyor well versed in the legislation and lease extension process.

We provide you with an expert from a selection of lease extension solicitors, which ensures a targeted and efficient service as you have a dedicated port of call with an individual lawyer. Our lease extension solicitors have a wealth of experience procuring Notting Hill lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.

Notting Hill Lease Extension Case Summaries:

Jack, Notting Hill, West London,

Jack owned a 2 bedroom flat in Notting Hill on the market with a lease of a little over fifty eight years unexpired. Jack informally contacted his freeholder being a well known local-based freehold company for a lease extension. The landlord was prepared to grant an extension on non-statutory terms taking the lease to 125 years subject to a rise in the rent to £125 per annum. Ordinarily, ground rent would not be due on a lease extension were Jack to invoke his statutory right. Jack obtained expert advice and secured satisfactory resolution without going to tribunal and ending up with a market value flat.

Notting Hill case:

In 2011 we were e-mailed by Mr and Mrs. J White who, having purchased a studio flat in Notting Hill in October 1996. We are asked if we could estimate the price would likely be to prolong the lease by ninety years. Identical properties in Notting Hill with 100 year plus lease were worth £227,800. The mid-range ground rent payable was £45 invoiced annually. The lease ran out on 2 April 2089. Taking into account 65 years as a residual term we estimated the compensation to the landlord for the lease extension to be between £13,300 and £15,400 plus fees.

Decision in Kensington and Chelsea

An example of a Lease Extension matter before the tribunal for a Notting Hill property is 2 Grove House 95 Addison Road in October 2013. the Tribunal decided that the premium to bepaid for a new lease is £50,050. This case related to 1 flat. The unexpired residue of the current lease was 68.4 years.