The nearer a residential lease in Chelsea nears to zero years unexpired, the more it reduces the value of the property. Where the lease has, beyond one hundred years remaining then this decrease may be fractional nevertheless there will become a point in time when a lease has fewer than 80 years unexpired as part of the premium you will incur is what is termed as a marriage value. This could increase sharply the cost. It is the primary rational as to why you should extend the lease without delay. Many flat owners in Chelsea will meet the qualifying criteria; that being said a lawyer will be able to advise whether you qualify to extend your lease. In limited situations you may not qualify, the most frequent reason being that you have not been the owner of the property for two years.
Leasehold properties in Chelsea with over one hundred years left on the lease are often regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such situations there is often little to be gained by purchasing the freehold unless savings on ground rent and service charges warrant it.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage should be declined (see exception below). Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office. Leases with fewer than 70 years should only be referred to the issuing office where the following scenario applies, as discretion may be applied subject to bank approval: • Property is located in any of the following prestigious developments: Cadogan, Crown, Grosvenor, Howard de Walden, Portman or Wellcome Trust Estates in Central London AND • The value of the property subject to the short remaining term is £500,000 or more AND • The loan to value does not exceed 90% for purchases, 90% like for like re-mortgages, 80% for re-mortgages with any element of capital raising and 80% for existing Barclays mortgage borrowers applying for additional borrowing; |
| Coventry Building Society | 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. |
| Skipton Building Society | 85 years from the date of completion of the mortgage For Buy to Let cases: - lettings must not breach any of the lessee’s covenants; and - consent of the lessor to lettings must be obtained if necessary |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
Irrespective of whether you are a tenant or a freeholder in Chelsea,the lease extension experts that we work with will always be willing to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Chelsea valuers.
Seth owned a high value flat in Chelsea on the market with a lease of a little over 59 years remaining. Seth informally spoke with his freeholder being a well known local-based freehold company and enquired on a premium to extend the lease. The landlord was keen to grant an extension on non-statutory terms taking the lease to 125 years subject to a new rent initially set at £200 per annum and increase every twenty five years thereafter. No ground rent would be due on a lease extension were Seth to invoke his statutory right. Seth procured expert advice and secured satisfactory deal informally and ending up with a market value flat.
In 2014 we were phoned by Mrs L Howard who, having moved into a recently refurbished flat in Chelsea in October 2011. We are asked if we could shed any light on how much (roughly) premium would likely be to extend the lease by an additional years. Similar properties in Chelsea with an extended lease were worth £200,800. The average ground rent payable was £65 invoiced per annum. The lease finished in 2085. Having 60 years as a residual term we estimated the premium to the landlord to extend the lease to be between £20,900 and £24,200 not including expenses.
An example of a Lease Extension matter before the tribunal 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 was 57.06 years.