The re-sale value of a leasehold property in South Kensington depends on how many years the lease has remaining. If it is close to or fewer than eighty years you should expect problems on re-sale, so it is advisable to arrange for a lease extension before purchasing. It is ideal to start the process of extending the lease is when the lease still has 82 years unexpired so that a lease extension can be concluded well before the 80 year threshold. Current legislation enables South Kensington qualifying lessees to obtain a new lease which will be for the balance of the existing lease plus an additional term of 90 years. The intention of the valuation is to determine the sum payable by the lessee to the freeholder for the acquisition of the lease extension.
It is generally considered that a property with in excess of one hundred years remaining is worth roughly the same as a freehold. Where an additional 90 years added to all but the shortest lease, the premises will be worth the same as a freehold for decades to come.
| Lender | Requirement |
|---|---|
| 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. |
| Godiva Mortgages | 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Engaging our service gives you better control over the value of your South Kensington leasehold, as your property will be more valuable and saleable in relation to the lease length should you decide to sell. The conveyancing solicitors that we work with are well versed in the legislation handling many hundreds of lease extensions or freehold purchase transactions.
Subsequent to unsuccessful correspondence with the freeholder of her garden flat in South Kensington, Lily initiated the lease extension process as the 80 year deadline was quickly advancing. The lease extension completed in July 2013. The landlord’s charges were negotiated to under 450 GBP.
Last Summer we were phoned by Mrs Gemma Wood , who moved into a newly refurbished flat in South Kensington in January 1999. The question was if we could approximate the price could be to extend the lease by a further 90 years. Identical residencies in South Kensington with 100 year plus lease were in the region of £174,200. The mid-range ground rent payable was £55 collected monthly. The lease elapsed in 2076. Given that there were 51 years as a residual term we calculated the compensation to the landlord to extend the lease to be within £31,400 and £36,200 plus fees.
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 residue of the current lease was 51.93 years.