South Kensington leases on residential properties are gradually decreasing in value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of your lease becomes more expensive. Legislation has been in place for sometime now which entitles qualifying South Kensington residential leaseholders to extend the terms of long leases. If you are a leasehold owner in South Kensington you should check if your lease has between seventy and ninety years remaining. In particular once the remaining lease term slips under 80 years, the premium due on any lease extension increases dramatically as an element of the premium you pay is what is known as a marriage value
It is generally accepted that a residential leasehold with in excess of 100 years unexpired lease term is worth roughly the same as a freehold. Where an further 90 years added to all but the shortest lease, the residence will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Chelsea 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. |
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
The conveyancing solicitors that we work with handle South Kensington 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.
In 2014 Jake, came perilously close to the eighty-year threshold with the lease on his garden flat in South Kensington. Having bought his flat 18 years previously, the lease term was of no relevance. Thankfully, he recognised he would imminently be paying way over the odds for Extending the lease. Jake extended the lease just under the wire last April. Jake and the landlord who owned the flat above ultimately settled on the final figure of £6,000 . If he not met the deadline, the sum would have escalated by at least £1,050.
Last August we were phoned by Dr Alexandra James , who was assigned a lease of a basement apartment in South Kensington in September 2010. The dilemma was if we could estimate the premium would likely be to prolong the lease by a further 90 years. Comparable residencies in South Kensington with a long lease were valued about £189,000. The mid-range ground rent payable was £55 invoiced quarterly. The lease lapsed in 2078. Given that there were 53 years unexpired we approximated the premium to the freeholder to extend the lease to be between £28,500 and £33,000 plus legals.
An example of a Lease Extension case for a South Kensington premises is Flat 16 21/22 Stanhope Gardens in November 2010. the Leasehold Valuation Tribunal concluded that the premium to be paid by the tenant on the grant of a new lease, in accordance with section 56 and Schedule 13 of the Leasehold Reform, Housing and Urban Development Act 1993, was £106,975 This case related to 1 flat. The unexpired lease term was 51.93 years.