The re-sale value of a leasehold property in Kensington is impacted by how long the lease has remaining. If it is close to or fewer than 80 years you should expect problems on re-sale, so it is advisable to arrange for a lease extension ahead of buying. It is preferable to start the lease extension process when the lease still has 82 years remaining so that formalities can be finalised in advance of the eighty year cut off point. Leasehold Reform legislation entitles Kensington qualifying lessees to acquire a new lease which will be for the balance of the existing lease plus a supplemental term of ninety years. The intention of the valuation is to determine the amount payable by the lessee to the freeholder for the purchase of the lease extension.
It is conventional wisdom that a residential leasehold with over one hundred years remaining is worth approximately the equivalent as a freehold. Where an further ninety years added to any lease with more than 30 years unexpired, the property will be equivalent in value to a freehold for many years in the future.
| Lender | Requirement |
|---|---|
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. |
| 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. |
Regardless of whether you are a tenant or a landlord in Kensington,the lease extension experts that we work with will always be happy to discuss any residential leasehold matters and offer you the benefit of their in-depth market knowledge and the close ties they enjoy with Kensington valuers.
Elijah owned a high value apartment in Kensington being sold with a lease of a few days over 72 years left. Elijah informally approached his landlord being a well known Manchester-based freehold company for a lease extension. The freeholder indicated a willingness to grant an extension taking the lease to 125 years subject to a new rent to start with set at £200 per annum and doubled every 25 years thereafter. Ordinarily, ground rent would not be due on a lease extension were Elijah to invoke his statutory right. Elijah obtained expert legal guidance and was able to make a more informed decision and handle with the matter and ending up with a market value flat.
Last Christmas we were called by Mr and Mrs. R Martinez , who purchased a studio apartment in Kensington in February 2011. We are asked if we could estimate the compensation to the landlord would be for a ninety year lease extension. Comparative premises in Kensington with a long lease were valued about £290,000. The mid-range ground rent payable was £60 collected every twelve months. The lease concluded in 2105. Having 80 years outstanding we estimated the premium to the freeholder for the lease extension to be within £13,300 and £15,400 plus fees.
An example of a Lease Extension decision for a Kensington property is 93 Oakwood Court in June 2010. the LVT determined that the premium to be paid for the new lease was £492,083, This case related to 1 flat. The number of years remaining on the existing lease(s) was 37.79 years.