Unfortunately that a South Kensington residential lease is a wasting asset. The lease value reduces in proportion to its lease length. The extent of this is taken for granted in the first few years due to the reduction being disguised by increases in the South Kensington property market.Once your lease nears 85ish years, you should start thinking about a lease extension. If the number of years remaining falls under eighty years, you will then be required to pay 50% of the property's 'marriage value' on top of the usual cost of the lease extension to the landlord. The marriage fee is the amount of extra value that a lease extension will add the property The majority of leasehold owners in South Kensington will be able to extend under the legislation; however a conveyancer should be able to clarify whether you are eligibility. In some cases you may not qualify. There are also strict timeframes and procedures to be adhered to once the process has commenced and you will need to be guided by your lawyer throughout the process.
It is generally accepted that a residential leasehold with in excess of one hundred years remaining is worth approximately the equivalent as a freehold. Where an further 90 years added to all but the shortest lease, the residence will be equivalent in value to a freehold for decades to come.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. |
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.
Following lengthy correspondence with the landlord of her ground floor flat in South Kensington, Georgina commenced the lease extension process as the 80 year mark was quickly advancing. The lease extension was concluded in November 2007. The landlord’s fees were negotiated to below 650 GBP.
In 2011 we were contacted by Mrs F Roberts who, having took over the lease of a purpose-built apartment in South Kensington in September 2008. We are asked if we could approximate the price would be for a ninety year extension to my lease. Comparable flats in South Kensington with an extended lease were in the region of £216,000. The mid-range ground rent payable was £60 billed monthly. The lease expired on 2 February 2083. Taking into account 58 years unexpired we estimated the compensation to the landlord for the lease extension to be within £28,500 and £33,000 plus professional charges.
An example of a Lease Extension decision for a South Kensington property 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.