The re-sale value of a leasehold property in Limehouse depends on how long the lease has left to run. If it is near to or less than 80 years you should foresee difficulties on re-sale, so it is recommended to arrange for the lease to be extended before buying. It is ideal to start the process of extending the lease is when the lease still has 82 years remaining so that formalities can be addressed in advance of the 80 year cut off point. Current legislation enables Limehouse qualifying lessees to an additional term of 90 years in addition to the remaining term, at a peppercorn rent (zero ground rent). The purpose of the valuation is to determine the amount payable by the lessee to the freeholder for the acquisition of the lease extension.
Leasehold premises in Limehouse with over one hundred years unexpired on the lease are sometimes referred to as ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such situations there is often little upside in buying the reversionary interest unless savings on ground rent and service charges warrant it.
| Lender | Requirement |
|---|---|
| Bank of Scotland | Minimum 70 years from the date of the mortgage. |
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Lloyds TSB Scotland | Minimum 70 years from the date of the mortgage. |
| TSB | Minimum of 70 years at mortgage commencement, with 30 years remaining at mortgage redemption. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
The conveyancing solicitors that we work with handle Limehouse 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.
Samuel owned a 2 bedroom flat in Limehouse being marketed with a lease of fraction over 59 years remaining. Samuel on an informal basis contacted his freeholder a well known Manchester-based freehold company for a lease extension. The freeholder indicated a willingness to extend the lease to 125 years subject to an increased rent to £125 annually. Ordinarily, ground rent would not be payable on a lease extension were Samuel to exercise his statutory right. Samuel procured expert advice and was able to make an informed decision and handle with the matter and readily saleable.
In 2013 we were contacted by Dr Lydia Baker who, having owned a ground floor flat in Limehouse in October 1997. We are asked if we could estimate the compensation to the landlord would be to extend the lease by a further 90 years. Comparative properties in Limehouse with a long lease were in the region of £285,000. The mid-range amount of ground rent was £45 billed per annum. The lease expired on 18 January 2093. Considering the 71 years unexpired we estimated the compensation to the landlord to extend the lease to be within £12,400 and £14,200 exclusive of legals.
An example of a Freehold Enfranchisement case for a Limehouse flat is 26 Rhondda Grove in June 2009. The net price payable by the leaseholders as determined by the Tribunal was £3,015.13. This comprised £11,300 premium for the reversion less £8,284.87 costs as ordered by the County Court.