The only way is down when it comes to South Kensington lease terms. South Kensington leaseholds that have a remaining term fewer than eighty years will drop in market price at a rapid rate, and the cost of extending your lease will go up.
Leasehold properties in South Kensington with over 100 years outstanding on the lease are often referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your property. In such situations there is often little to be gained by buying the reversionary interest unless savings on ground rent and estate charges merit it.
Lender | Requirement |
---|---|
Bank of Scotland | Minimum 70 years from the date of the mortgage. |
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; |
Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
Lloyds TSB Scotland | 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. |
The lawyers that we work with undertake 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 conveyancer we work with provide it.
Jude was the the leasehold proprietor of a studio apartment in South Kensington being sold with a lease of fraction over 72 years unexpired. Jude on an informal basis spoke with his freeholder being 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 initially set at £100 per annum and increase every 25 years thereafter. Ordinarily, ground rent would not be due on a lease extension were Jude to exercise his statutory right. Jude obtained expert advice and was able to make a more informed decision and deal with the matter and ending up with a market value flat.
Last year we were approach by Mr and Mrs. G François , who completed a one bedroom flat in South Kensington in February 2009. The question was if we could approximate the premium would be for a ninety year lease extension. Identical properties in South Kensington with 100 year plus lease were valued around £250,400. The mid-range amount of ground rent was £65 invoiced yearly. The lease terminated in 2089. Having 64 years unexpired we estimated the premium to the landlord for the lease extension to be within £19,000 and £22,000 plus costs.
An example of a Lease Extension case for a South Kensington flat 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 related to 1 flat. The unexpired term was 51.93 years.