With a long leasehold premises in Knightsbridge, you are actually buying an entitlement to reside in a property for a set period of time. These days flat leases are usually granted for 99 years or 125. Even though this may appear like a lengthy period of time, you may think about extending the lease sooner rather than later. The general rule is that the shorter the number of years is the cost of extending the lease increases markedly notably once there are fewer than 80 years remaining. Anyone in Knightsbridge with a lease nearing 81 years unexpired should seriously think of extending it as soon as possible. When the lease term has below 80 years left, under the relevant legislation the landlord is entitled to calculate and demand a larger amount, assessed on a technical computation, known as “marriage value” which is payable.
Leasehold residencies in Knightsbridge with over one hundred years left on the lease are often regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such circumstances there is often little to be gained by buying the reversionary interest unless savings on ground rent and service charges justify it.
| Lender | Requirement |
|---|---|
| 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; |
| 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. |
| Halifax | 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
The lawyers that we work with procure Knightsbridge lease extensions and help protect your position. A lease extension can be arranged to be completed to coincide with a change of ownership so the costs of the lease extension are paid for using part of the sale proceeds. You really do need expert legal advice in this difficult and technical area of law. The lawyer we work with provide it.
Half a year ago Leo, started to get close to the eighty-year threshold with the lease on his ground floor apartment in Knightsbridge. In buying his home two decades ago, the length of the lease was of minimal interest. Thankfully, he noticed he needed to take action soon on a lease extension. Leo arranged for a lease extension just under the wire in September. Leo and the freeholder eventually agreed on sum of £5,000 . If he not met the deadline, the amount would have become more exhorbitant by a minimum £1,025.
In 2012 we were called by Dr Freya Wood who, having acquired a one bedroom flat in Knightsbridge in April 2010. The question was if we could shed any light on how much (roughly) premium would be to extend the lease by an additional years. Comparative homes in Knightsbridge with 100 year plus lease were valued about £203,200. The mid-range amount of ground rent was £65 collected monthly. The lease came to a finish in 2087. Given that there were 61 years remaining we calculated the premium to the landlord to extend the lease to be between £19,000 and £22,000 not including costs.
An example of a Lease Extension decision for a Knightsbridge residence is Flat 3 47 Cadogan Square in December 2010. the Tribunal determined that the premium payable to the landord by the leaseholder for the lease extension was £732,935 This case related to 1 flat. The unexpired residue of the current lease was 13.33 years.