There is no doubt about it a leasehold flat or house in Shadwell is a wasting asset as a result of the diminishing lease term. Where the residual term has, beyond 125 years to run then this decrease may be of little impact nevertheless there will become a stage when a lease has fewer than eighty years left as part of the premium you will incur is what is termed as a marriage value. This could increase sharply the cost. It is the main rational as to why you should extend the lease without delay. Many flat owners in Shadwell will meet the qualifying criteria; that being said a lawyer can advise whether you are eligible to extend your lease. In limited situations you may not qualify, the most frequent reason being that you have not been the owner of the property for two years.
It is conventional wisdom that a property with over 100 years remaining is worth roughly the equivalent 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 |
|---|---|
| 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. |
| 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. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| 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. |
| Yorkshire 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. |
The lawyers that we work with undertake Shadwell 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.
Two years ago Theo, came perilously close to the 80-year mark with the lease on his basement apartment in Shadwell. Having purchased his flat twenty years previously, the lease term was of no significance. As luck would have it, it dawned on him that he needed to take steps soon on a lease extension. Theo was able to extend his lease just under the wire in May. Theo and the landlord subsequently agreed on a premium of £5,500 . If he failed to meet the deadline, the figure would have increased by a minimum £1,100.
Ms Isabel David acquired a ground floor apartment in Shadwell in May 2005. We are asked if we could estimate the compensation to the landlord could be to extend the lease by ninety years. Identical homes in Shadwell with 100 year plus lease were valued around £191,400. The average ground rent payable was £55 billed annually. The lease finished in 2079. Having 54 years unexpired we calculated the compensation to the freeholder for the lease extension to be within £34,200 and £39,600 plus expenses.
An example of a Freehold Enfranchisement case 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 related to 3 flats. The unexpired lease term was 101.61 years.