With a domestic leasehold property in Chelsea, you are actually buying a right to reside in a property for a set period of time. In recent years flat leases typically tend to be for 99 years or 125. Many leasehold owners are unconcerned as this seems like a long period of time, you may think about extending the lease sooner as opposed to later. The general rule is that the shorter the number of years is the cost of extending the lease increases markedly particularly when there are less than eighty years remaining. Anyone in Chelsea with a lease nearing 81 years left should seriously consider extending it as soon as possible. When the lease term has below eighty years remaining, under the current legislation the landlord is entitled to calculate and demand a greater amount, based on a technical calculation, known as “marriage value” which is payable.
Leasehold properties in Chelsea with more than one hundred years left on the lease are often regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your property. In such circumstances there is often little to be gained by purchasing the reversionary interest unless savings on ground rent and service charges merit it.
| Lender | Requirement |
|---|---|
| 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. |
| 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 75 years plus the term of the mortgage at the outset of the mortgage. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Engaging our service gives you better control over the value of your Chelsea leasehold, as your property will be more valuable and saleable in terms of lease length should you wish to sell. The lawyers that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Subsequent to lengthy negotiations with the landlord of her purpose-built apartment in Chelsea, Naomi commenced the lease extension process just as her lease was coming close to the all-important eighty-year deadline. The legal work was finalised in April 2007. The landlord’s fees were kept to an absolute minimum.
In 2012 we were approached by Mr and Mrs. L Cooper who, having bought a ground floor flat in Chelsea in April 2010. The dilemma was if we could shed any light on how much (approximately) premium would likely be to extend the lease by ninety years. Identical properties in Chelsea with an extended lease were valued about £168,800. The average ground rent payable was £60 collected quarterly. The lease terminated in 2081. Considering the 55 years as a residual term we approximated the compensation to the landlord to extend the lease to be between £31,400 and £36,200 not including legals.
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 related to 1 flat. The unexpired term as at the valuation date was 57.06 years.