North Kensington residential property owned on a long lease is a depreciating asset as the leaseholder only owns the property for a set term.
It is conventional wisdom that a residential leasehold with more than one hundred years remaining is worth roughly the equivalent as a freehold. Where an further ninety years added to all but the shortest lease, the property will be equivalent in value to a freehold for many years ahead.
| 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
The conveyancing solicitors that we work with procure North Kensington 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 conveyancer we work with provide it.
Eli owned a studio flat in North Kensington on the market with a lease of fraction over sixty years remaining. Eli informally contacted his freeholder a well known Bristol-based freehold company for a lease extension. The landlord was prepared to give an extension on non-statutory terms taking the lease to 125 years subject to a new rent at the outset set at £100 per annum and increase every 25 years thereafter. No ground rent would be due on a lease extension were Eli to invoke his statutory right. Eli obtained expert advice and secured an acceptable deal without going to tribunal and readily saleable.
Mr and Mrs. W Howard moved into a one bedroom apartment in North Kensington in July 1995. The question was if we could approximate the price would be to prolong the lease by 90 years. Identical premises in North Kensington with a long lease were valued around £257,800. The mid-range ground rent payable was £65 collected yearly. The lease ran out in 2091. Having 65 years unexpired we calculated the premium to the freeholder for the lease extension to be within £18,100 and £20,800 exclusive of costs.
An example of a Lease Extension matter before the tribunal for a North Kensington flat 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 was in relation to 1 flat. The unexpired lease term was 37.79 years.