Unfortunately that a Shoreditch residential lease is a wasting asset. As the lease term diminishes so does the value of the property. The extent of this is taken for granted in the first few years due to the loss of value being disguised by increases in the Shoreditch property prices.Where your lease has approximately ninety years left, you need to start considering a lease extension. An important point to note is that it is desirable for lease extension to take place before the term of the existing lease falls below eighty years - otherwise a higher premium will be payable. Most leasehold owners in Shoreditch will be able to extend under the legislation; however a lawyer will be able to clarify if you are eligibility. In some situations you may not qualify. There are also strict timetables and procedures to be adhered to once the process is initiated and you will need to be guided by your lawyer for the duration of the formalities.
It is generally accepted that a property with over 100 years remaining is worth approximately the same as a freehold. Where an additional ninety years added to all but the shortest lease, the property will be worth the same as a freehold for many years in the future.
| 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. |
| Leeds Building Society | 85 years remaining from the start of the mortgage. |
| 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. |
Retaining our service gives you better control over the value of your Shoreditch leasehold, as your property will be more valuable and saleable in relation to the lease length should you wish 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 discussions with the freeholder of her purpose-built flat in Shoreditch, Mia initiated the lease extension process as the 80 year mark was rapidly nearing. The legal work was finalised in April 2009. The freeholder’s costs were kept to an absolute minimum.
Last Summer we were contacted by Mr W Vincent , who took over the lease of a studio flat in Shoreditch in May 2001. The dilemma was if we could approximate the premium could be for a ninety year lease extension. Comparable properties in Shoreditch with an extended lease were worth £267,600. The average ground rent payable was £65 billed every twelve months. The lease ended on 15 June 2092. Taking into account 67 years left we approximated the compensation to the landlord to extend the lease to be between £14,300 and £16,400 exclusive of fees.
An example of a Lease Extension matter before the tribunal for a Shoreditch property 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 related to 2 flats. The unexpired term was 72.39 years.