Chelsea leases on domestic properties are gradually losing value. Where your lease has in the region of 90 years left, you should start considering the need for a lease extension. 80 years is a significant number: when the remaining term of a lease falls below this level then you begin incurring an additional element called marriage value. Flat owners in Chelsea will usually be legally entitled to a lease extension; however a solicitor will check if you qualify. In certain circumstances you may not qualify. There are prescribed deadlines and formalities to follow once the process has commenced so it’s wise to be guided by a conveyancing solicitor during the process.
It is conventional wisdom that a property with more than one hundred years unexpired lease term is worth roughly the equivalent as a freehold. Where an further ninety years added to any lease with more than 30 years left, the residence will be equivalent in value to a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| 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. |
Regardless of whether you are a tenant or a landlord in Chelsea,the lease extension solicitors that we work with will always be prepared to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Chelsea valuers.
Leon was the the leasehold proprietor of a 2 bedroom apartment in Chelsea being marketed with a lease of a little over sixty years left. Leon 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 landlord was keen to grant an extension on non-statutory terms taking the lease to 125 years on the basis of an increased rent to £100 per annum. Ordinarily, ground rent would not be due on a lease extension were Leon to exercise his statutory right. Leon procured expert legal guidance and was able to make an informed decision and handle with the matter and sell the property.
Dr Felix Young bought a studio flat in Chelsea in July 2001. The question was if we could shed any light on how much (roughly) compensation to the landlord would be to prolong the lease by an additional years. Comparative premises in Chelsea with 100 year plus lease were valued about £203,200. The mid-range ground rent payable was £65 collected every twelve months. The lease expired in 2087. Having 61 years remaining we approximated the premium to the landlord for the lease extension to be within £20,000 and £23,000 exclusive of legals.
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 was in relation to 1 flat. The unexpired lease term was 57.06 years.