When it comes to domestic leasehold premises in Chelsea, you are in fact renting it for a certain period of time. In recent years flat leases typically tend to be for 99 years or 125. Even though this may appear like a lengthy period of time, you should consider a lease extension sooner rather than later. The general rule is that the shorter the lease is the cost of extending the lease becomes disproportionately greater particularly once there are less than eighty years remaining. Leasehold owners in Chelsea with a lease drawing near to 81 years remaining should seriously consider extending it without delay. When the lease term has below eighty years outstanding, under the current statute the landlord is entitled to calculate and levy a greater amount, based on a technical calculation, strangely termed as “marriage value” which is payable.
Leasehold properties in Chelsea with over 100 years left on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such situations there is often little to be gained by purchasing the freehold unless savings on ground rent and maintenance charges merit it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Using our service will provide you enhanced control over the value of your Chelsea leasehold, as your property will be more valuable and marketable in respect of lease length should you decide to sell. The conveyancing solicitors that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Subsequent to lengthy discussions with the freeholder of her one bedroom flat in Chelsea, Jade commenced the lease extension process just as the lease was approaching the all-important eighty-year threshold. The transaction was finalised in August 2012. The landlord’s charges were kept to an absolute minimum.
Mr and Mrs. Y Parker purchased a purpose-built apartment in Chelsea in January 2003. The dilemma was if we could estimate the premium could be for a ninety year extension to my lease. Comparable homes in Chelsea with an extended lease were worth £270,000. The mid-range ground rent payable was £55 collected annually. The lease terminated on 21 February 2100. Given that there were 75 years outstanding we estimated the compensation to the freeholder for the lease extension to be between £9,500 and £11,000 plus expenses.
An example of a Lease Extension case 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 related to 1 flat. The unexpired term as at the valuation date was 57.06 years.