Shoreditch leases on domestic deteriorating in value. Where your lease has in the region of ninety years left, you should start considering the need for a lease extension. Eighty years is a significant number: when the unexpired term of a lease drops below this level then you begin paying an additional element called marriage value. Leasehold owners in Shoreditch will usually be legally entitled to a lease extension; however a solicitor should be able confirm your eligibility. In some situations you may not be entitled. There are also strict timetables and procedures to comply with once the process is triggered so it’s sensible to be guided by a lawyer during the process.
It is generally considered that a residential leasehold with over one hundred years unexpired lease term is worth approximately the equivalent as a freehold. Where an further 90 years added to all but the shortest lease, the property will be equivalent in value to a freehold for many years in the future.
| 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; |
| Halifax | Minimum 70 years from the date of the mortgage. |
| National Westminster Bank | Mortgage term plus 30 years. |
| 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. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The conveyancers that we work with undertake Shoreditch 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 lawyer we work with provide it.
Subsequent to protracted discussions with the freeholder of her ground floor flat in Shoreditch, Elizabeth started the lease extension process as the 80 year mark was swiftly nearing. The legal work was concluded in August 2014. The landlord’s costs were restricted to a tad over 700 GBP.
In 2011 we were contacted by Mr and Mrs. F Simon who, having was assigned a lease of a one bedroom apartment in Shoreditch in February 1995. The question was if we could approximate the premium could be for a 90 year extension to my lease. Similar properties in Shoreditch with a long lease were valued around £191,400. The average amount of ground rent was £55 collected yearly. The lease concluded on 28 February 2079. Having 54 years unexpired we approximated the premium to the freeholder for the lease extension to be within £34,200 and £39,600 exclusive of professional charges.
An example of a Lease Extension matter before the tribunal for a Shoreditch premises is 137 & 139 Haberdasher Street in December 2013. The Tribunal determines in accordance with section 48 and Schedule 13 of the Leasehold Reform, Housing and Urban Development Act 1993 that the premium for the extended lease for each Property should be £12,350.00. This case was in relation to 2 flats. The unexpired lease term was 72.39 years.