Shadwell leases on residential properties are gradually diminishing in value. The shorter the remaining lease term becomes, the less it is worth – and accordingly any extension of your lease gets more expensive. It is the case that most Shadwell tenants have the right to extend their lease by an additional ninety years under the 1993 Leasehold Reform Act. If you are a leasehold owner in Shadwell you should check if your lease has between 70 and 90 years left. There are compelling reasons why a Shadwell flat owner with a lease having around 80 years unexpired should take steps to make sure that a lease extension is effected without delay
Leasehold residencies in Shadwell with over one hundred years outstanding on the lease are sometimes 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 purchasing the reversionary interest unless savings on ground rent and estate charges justify it.
| Lender | Requirement |
|---|---|
| Barclays plc | Leases with less than 70 years at the commencement of the mortgage are not acceptable. 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; |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| 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. |
| 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
Irrespective of whether you are a tenant or a landlord in Shadwell,the lease extension lawyers that we work with will always be prepared to discuss any residential leasehold matters and offer you the benefit of their experience and the close ties they enjoy with Shadwell valuers.
During the course of the last few months Nathan, came precariously close to the eighty-year threshold with the lease on his studio apartment in Shadwell. In buying his property two decades ago, the unexpired term was of no concern. by good luck, he realised he needed to take steps soon on a lease extension. Nathan extended the lease just ahead of time last July. Nathan and the freeholder in the end agreed on sum of £5,000 . If he failed to meet the deadline, the premium would have increased by a minimum £1,050.
In 2011 we were contacted by Dr Seth Lefebvre who, having acquired a first floor flat in Shadwell in March 2009. The dilemma was if we could shed any light on how much (approximately) price could be to extend the lease by a further 90 years. Comparative flats in Shadwell with 100 year plus lease were valued around £250,400. The average amount of ground rent was £65 invoiced annually. The lease lapsed in 2090. Considering the 64 years left we approximated the premium to the landlord to extend the lease to be within £19,000 and £22,000 plus expenses.
An example of a Freehold Enfranchisement matter before the tribunal for a Shadwell property is 12, 14 & 16 Hull Close in May 2010. the Tribunal determined that the premium payable for the acquisition of the freehold to the subject premises was the sum of £18,300 This case was in relation to 3 flats. The unexpired term as at the valuation date was 101.61 years.