Chelsea leases on residential properties are gradually losing value. if your lease has about 90 years left, you should start considering the need for a lease extension. An important point to note is that it is desirable for a lease extension to take place before the term of the existing lease falls below eighty years - otherwise a higher premium will be payable. Leasehold owners in Chelsea will usually be legally entitled to a lease extension; however It would be wise to check with a lawyer to confirm your eligibility. In some situations you may not be entitled. There are prescribed timetables and steps to comply with once the process is initiated so it’s wise to be guided by a conveyancer during the process.
Leasehold premises in Chelsea with more than one hundred years unexpired on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such circumstances there is often little to be gained by purchasing the freehold unless savings on ground rent and estate charges merit it.
| Lender | Requirement |
|---|---|
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. For Shared Ownership, the remaining term of the lease must also be not less than 75 years at the outset 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. |
| 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 |
Irrespective of whether you are a tenant or a freeholder in Chelsea,the lease extension solicitors that we work with will always be happy to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Chelsea valuers.
Tyler was the the leasehold owner of a high value apartment in Chelsea on the market with a lease of just over 72 years left. Tyler on an informal basis approached his freeholder being a well known London-based freehold company and enquired on a premium to extend the lease. The freeholder indicated a willingness to extend the lease to 125 years on the basis of an increased rent to £200 annually. Ordinarily, ground rent would not be due on a lease extension were Tyler to invoke his statutory right. Tyler procured expert legal guidance and was able to make a more informed judgement and deal with the matter and ending up with a market value flat.
Mr and Mrs. G Wood purchased a garden flat in Chelsea in September 1998. The dilemma was if we could estimate the premium would likely be for a 90 year extension to my lease. Identical residencies in Chelsea with a long lease were valued about £255,000. The mid-range amount of ground rent was £50 invoiced per annum. The lease came to a finish on 14 September 2097. Having 71 years unexpired we estimated the compensation to the landlord to extend the lease to be between £9,500 and £11,000 exclusive of professional charges.
An example of a Lease Extension matter before the tribunal for a Chelsea property 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 number of years remaining on the existing lease(s) was 57.06 years.