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Why you should start your Knightsbridge lease extension


Top reasons for lease extension now:

A Knightsbridge lease depreciates with the years remaining on the lease.

Knightsbridge leases on domestic deteriorating in value. Where your lease has in the region of 90 years left, you should start considering the need for a lease extension. An important point to note is that it is financially advisable for your lease extension to be in place before the term of the current lease dips lower than eighty years - otherwise a higher premium will be payable. Flat owners in Knightsbridge will mostly qualify for a lease extension; however a solicitor will confirm if you qualify. In some cases you may not be entitled. There are prescribed deadlines and procedures to comply with once the process is initiated so it’s best to be guided by a conveyancer during the process.

An extended lease has roughly the same value as a freehold

It is conventional wisdom that a property with over one hundred years unexpired lease term is worth roughly the same as a freehold. Where an additional 90 years added to any lease with more than 35 years remaining, the premises will be worth the same as a freehold for many years ahead.

Mortgage lenders may decide not to loan monies on a short lease

Mortgage Lenders vary in their lending criteria. Some draw the line at seventy five years left on the lease; others may be happy with anything over 70 years. With less than 60 years, it may be problematic to obtain a mortgage at all.

Lender Requirement
Barclays plc Leases with less than 70 years at the commencement of the mortgage should be declined (see exception below).

Leases with greater than 70 years but fewer than 85 years remaining must be referred to issuing office.

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.
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.
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.
Lloyds TSB Scotland Minimum 70 years from the date of the mortgage.

Get in touch with one of our Knightsbridge lease extension solicitors or enfranchisement solicitors

Retaining our service gives you better control over the value of your Knightsbridge leasehold, as your property will be more valuable and saleable in relation to the lease length should you decide to sell. The lawyers that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.

Knightsbridge Lease Extension Case Summaries:

Hunter, Knightsbridge, London,

Hunter owned a conversion apartment in Knightsbridge on the market with a lease of just over 59 years remaining. Hunter on an informal basis contacted his freeholder a well known Bristol-based freehold company for a lease extension. The freeholder indicated a willingness to extend the lease to 125 years on the basis of a new rent at the outset set at £150 per annum and doubled every 25 years thereafter. No ground rent would be payable on a lease extension were Hunter to invoke his statutory right. Hunter procured expert advice and secured satisfactory resolution without going to tribunal and ending up with a market value flat.

Knightsbridge case:

Dr H Sharif purchased a recently refurbished apartment in Knightsbridge in May 1996. We are asked if we could estimate the premium would be to extend the lease by ninety years. Identical homes in Knightsbridge with 100 year plus lease were in the region of £254,200. The mid-range ground rent payable was £60 invoiced quarterly. The lease ended on 24 February 2076. Having 51 years remaining we calculated the compensation to the freeholder for the lease extension to be between £43,700 and £50,600 plus professional charges.

Decision in Kensington and Chelsea

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.