On the balance of probabilities if you own a flat in Chelsea you actually own a long leasehold interest over your property
Leasehold premises in Chelsea with over one hundred years outstanding on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such situations there is often little upside in purchasing the freehold unless savings on ground rent and estate charges justify it.
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| Santander | You must report the unexpired lease term to us and await our instructions if: 1. the unexpired term assumed by our valuer is between 55 and 82 years, but the actual unexpired term differs by more than one year (whether longer or shorter); or 2. the unexpired term assumed by our valuer is more than 82 years but the actual unexpired term is less than 82 years; or 3. no valuation report is provided However, we will not accept a lease where on expiry of the mortgage: (i) less than 50 years remain and all or part of the loan is repaid on an interest-only basis: or (ii) less than 30 years remain and the loan is repaid on a capital and interest basis We will accept a lease that has been extended under the provisions of the Leasehold Reform Act 1993 provided statutory compensation would be available to the leaseholder. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The lawyers 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 conveyancing solicitor we work with provide it.
Last October Seth, came precariously near to the eighty-year threshold with the lease on his basement flat in Chelsea. In buying his property 18 years previously, the lease term was of little significance. Fortunately, he realised he needed to take steps soon on a lease extension. Seth was able to extend his lease just under the wire last June. Seth and the freeholder via the managing agents eventually settled on a premium of £5,500 . If the lease had dropped below 80 years, the figure would have gone up by at least £1,150.
Last Summer we were e-mailed by Mr D King , who bought a ground floor apartment in Chelsea in August 2003. We are asked if we could shed any light on how much (approximately) price would be for a ninety year extension to my lease. Comparable homes in Chelsea with an extended lease were valued about £203,200. The mid-range amount of ground rent was £65 billed monthly. The lease concluded in 2086. Considering the 61 years remaining we calculated the premium to the landlord to extend the lease to be within £19,000 and £22,000 not including costs.
An example of a Lease Extension case for a Chelsea residence 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 unexpired term as at the valuation date was 57.06 years.