Chelsea leases on residential properties are gradually diminishing in value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of your lease becomes more expensive. It is the case that most Chelsea tenants have the right to extend their lease by an additional ninety years in accordance with the 1993 Leasehold Reform Act. If you are a leasehold owner in Chelsea you really ought to investigate if your lease has between seventy and 90 years left. In particular once the remaining lease term slips under 80 years, the premium due on any lease extension sharply increases as an element of the premium you pay is what is known as a marriage value
Leasehold residencies in Chelsea with over 100 years left on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your premises. In such circumstances there is often little to be gained by buying the reversionary interest unless savings on ground rent and maintenance charges merit it.
| 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
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 lawyer we work with provide it.
In 2014 Sebastian, started to get near to the 80-year threshold with the lease on his two bedroom flat in Chelsea. Having purchased his property twenty years previously, the unexpired term was of minimal relevance. Thankfully, he became aware that he would imminently be paying an escalated premium for Extending the lease. Sebastian was able to extend his lease just under the wire in March. Sebastian and the landlord who owned the flat above eventually settled on sum of £5,500 . If he had missed the deadline, the amount would have become more costly by at least £1,100.
In 2013 we were approached by Mr and Mrs. I Simon who, having owned a basement flat in Chelsea in June 2004. We are asked if we could approximate the price could be for a ninety year lease extension. Comparative premises in Chelsea with 100 year plus lease were valued about £176,200. The average amount of ground rent was £65 invoiced per annum. The lease end date was in 2081. Taking into account 56 years as a residual term we estimated the premium to the landlord for the lease extension to be between £29,500 and £34,000 exclusive of fees.
An example of a Lease Extension matter before the tribunal for a Chelsea premises 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 affected 1 flat. The number of years remaining on the existing lease(s) was 57.06 years.