Unfortunately that a Chelsea 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 first few years due to the loss of value being disguised by increases in the Chelsea property prices.Once your lease gets to 85ish years, you should start considering a lease extension. If lease term slips below eighty years, you will end up paying half of the property's 'marriage value' in addition to the usual cost of the lease extension to the landlord. Marriage value is the amount of additional value that a lease extension will add the property Most flat owners in Chelsea will be able to extend under the legislation; however a conveyancer should be able to confirm if you qualify for an extension. In some situations you may not qualify. There are also strict timetables and procedures to follow once the process is initiated and you will need to be guided by your conveyancer from beginning to end of the formalities.
Leasehold residencies in Chelsea with more than 100 years left on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such situations there is often little upside in purchasing the freehold unless savings on ground rent and maintenance charges warrant 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. |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
The conveyancing solicitors that we work with procure Chelsea 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 conveyancer we work with provide it.
Off the back of unsuccessful discussions with the landlord of her studio flat in Chelsea, Lucy commenced the lease extension process just as the lease was nearing the crucial eighty-year mark. The lease extension was finalised in November 2013. The landlord’s fees were restricted to slightly above 550 GBP.
Mr and Mrs. I Lee purchased a garden apartment in Chelsea in April 2009. The question was if we could approximate the premium could be for a ninety year lease extension. Comparative properties in Chelsea with 100 year plus lease were worth £264,000. The average amount of ground rent was £60 collected per annum. The lease lapsed on 1 June 2079. Having 53 years left we estimated the compensation to the landlord to extend the lease to be between £37,100 and £42,800 not including fees.
An example of a Lease Extension decision for a Chelsea flat is 150A Albert Palace Mansions Lurline Gardens in July 2013. The Tribunal determined that the premium payable for the new lease of the subject property was £42,069 This case was in relation to 1 flat. The remaining number of years on the lease was 57.06 years.