The market value of South Kensington leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The expense of extending the lease can escalate significantly once the remaining term is less than 80 years
Leasehold properties in South Kensington with in excess of 100 years remaining on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease is worth the same as a freehold interest in your home. In such circumstances there is often little upside in purchasing the reversionary interest unless savings on ground rent and maintenance charges justify it.
| Lender | Requirement |
|---|---|
| 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. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
The conveyancing solicitors that we work with handle South 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 conveyancing solicitor we work with provide it.
After unsuccessful negotiations with the freeholder of her ground floor apartment in South Kensington, Shannon initiated the lease extension process just as the lease was nearing the critical eighty-year deadline. The transaction was finalised in March 2006. The landlord’s fees were kept to an absolute minimum.
In 2014 we were called by Ms I Gómez who, having took over the lease of a first floor apartment in South Kensington in September 2008. The dilemma was if we could estimate the price would likely be to prolong the lease by 90 years. Comparable premises in South Kensington with an extended lease were valued around £200,000. The mid-range amount of ground rent was £50 invoiced annually. The lease came to a finish in 2103. Taking into account 77 years unexpired we estimated the compensation to the landlord for the lease extension to be between £8,600 and £9,800 exclusive of legals.
An example of a Lease Extension decision for a South Kensington residence is Flat 16 21/22 Stanhope Gardens in November 2010. the Leasehold Valuation Tribunal concluded that the premium to be paid by the tenant on the grant of a new lease, in accordance with section 56 and Schedule 13 of the Leasehold Reform, Housing and Urban Development Act 1993, was £106,975 This case was in relation to 1 flat. The unexpired lease term was 51.93 years.