When it comes to long leasehold premises in Chelsea, you are in fact renting it for a certain amount of time. Modern flat leases are usually granted for 99 years or 125. Even though this may appear like a lengthy period of time, you may consider a lease extension sooner as opposed to later. The general rule is that the shorter the lease is the cost of extending the lease increases markedly especially once there are less than 80 years left. Leasehold owners in Chelsea with a lease nearing 81 years remaining should seriously think of extending it without delay. Once a lease has below 80 years outstanding, under the relevant legislation the landlord is entitled to calculate and charge a greater amount, based on a technical computation, known as “marriage value” which is payable.
Leasehold properties in Chelsea with more than 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 home. In such situations there is often little to be gained by buying the freehold unless savings on ground rent and estate charges warrant it.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| 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. |
| Yorkshire 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. |
Engaging our service gives you increased control over the value of your Chelsea leasehold, as your property will be more valuable and marketable in respect of lease length should you wish to sell. The conveyancing solicitors that we work with have a wealth of experience of handling many hundreds of lease extensions or freehold purchase transactions.
Last October Felix, came seriously close to the 80-year threshold with the lease on his leasehold flat in Chelsea. Having purchased his property 18 years ago, the length of the lease was of no interest. Luckily, he noticed he needed to take action soon on a lease extension. Felix extended the lease at the eleventh hour last March. Felix and the freeholder subsequently agreed on the final figure of £5,500 . If the lease had gone lower than 80 years, the premium would have escalated by a minimum £850.
In 2013 we were e-mailed by Ms Hollie Roberts who, having took over the lease of a basement apartment in Chelsea in October 2010. The question was if we could approximate the price would be for a 90 year extension to my lease. Identical homes in Chelsea with a long lease were worth £264,000. The average ground rent payable was £60 billed annually. The lease ended in 2077. Taking into account 53 years left we calculated the compensation to the landlord for the lease extension to be within £37,100 and £42,800 plus expenses.
An example of a Lease Extension matter before the tribunal for a Chelsea flat 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 unexpired residue of the current lease was 57.06 years.