It’s a harsh certainty that a Belgravia residential lease is a deteriorating asset. As the lease term diminishes so does the value of the property. The extent of this is taken for granted in the early years due to the loss of value being disguised by increases in the Belgravia property market.Once your lease gets to 85ish years, you need to start thinking about a lease extension. If the number of years remaining drops below eighty 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 The majority of flat owners in Belgravia will be able to extend under the legislation; however a conveyancing solicitor will be able to clarify whether you are eligibility. In some cases you may not qualify. There are also strict deadlines and procedures to follow once the process has commenced and you will need to be guided by your lawyer throughout the process.
Leasehold premises in Belgravia with in excess of one hundred years unexpired on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such situations there is often little to be gained by buying the reversionary interest unless savings on ground rent and maintenance charges justify it.
| Lender | Requirement |
|---|---|
| Godiva Mortgages | 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must be at least 30 years plus the term of the mortgage at the outset 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. |
The conveyancing solicitors that we work with handle Belgravia 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.
During the course of the last few months Alfie, started to get near to the eighty-year threshold with the lease on his purpose- built apartment in Belgravia. Having purchased his property 19 years previously, the unexpired term was of no bearing. Thankfully, he became aware that he would imminently be paying way over the odds for a lease extension. Alfie arranged for a lease extension just ahead of time in January. Alfie and the freeholder via the managing agents ultimately agreed on a premium of £5,500 . If he failed to meet the deadline, the sum would have gone up by a minimum £1,150.
In 2014 we were contacted by Dr Jasper Simon who, having moved into a one bedroom flat in Belgravia in January 2007. We are asked if we could approximate the premium could be for a ninety year extension to my lease. Similar flats in Belgravia with an extended lease were valued about £260,000. The mid-range amount of ground rent was £50 invoiced monthly. The lease elapsed on 24 May 2099. Taking into account 73 years as a residual term we estimated the premium to the landlord to extend the lease to be within £9,500 and £11,000 plus costs.
An example of a Lease Extension decision for a Belgravia property is Flat 3 47 Cadogan Square in December 2010. the Tribunal determined that the premium payable to the landord by the leaseholder for the lease extension was £732,935 This case related to 1 flat. The remaining number of years on the lease was 13.33 years.