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 materialy once the remaining term is less than eighty years
Leasehold properties in South Kensington with over one hundred years left on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your premises. In such situations there is often little upside in purchasing the freehold unless savings on ground rent and service charges justify it.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| 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. |
| 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. |
| National Westminster Bank | Mortgage term plus 30 years. |
Lease extensions in South Kensington can be a difficult process. We recommend you obtain guidance from a lawyer and surveyor well versed in the legislation and lease extension process.
We provide you with an expert from a selection of lease extension solicitors, which ensures a targeted and efficient service as you have a dedicated port of call with an individual lawyer. Our lease extension solicitors have in-depth market knowledge dealing with South Kensington lease extensions and further afield, as well as any potential issues which may arise as well as problems with the Leasehold Valuation Tribunal.
Off the back of unsuccessful correspondence with the freeholder of her purpose-built apartment in South Kensington, Robyn started the lease extension process just as the lease was nearing the critical 80-year deadline. The transaction was finalised in September 2011. The landlord’s costs were kept to an absolute minimum.
Last Winter we were e-mailed by Mr and Mrs. O Peterson , who purchased a ground floor apartment in South Kensington in May 1997. We are asked if we could shed any light on how much (approximately) price would be for a ninety year extension to my lease. Similar residencies in South Kensington with 100 year plus lease were in the region of £285,000. The mid-range ground rent payable was £45 billed yearly. The lease ended on 17 March 2096. Considering the 71 years remaining we estimated the premium to the landlord to extend the lease to be between £12,400 and £14,200 not including expenses.
An example of a Lease Extension case 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 affected 1 flat. The unexpired residue of the current lease was 51.93 years.