The re-sale value of a leasehold property in Shoreditch depends on how many years the lease has remaining. If it is near to or fewer 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 a lease still has 82 years unexpired so that all matters can be finalised ahead of the eighty year threshold. Current legislation entitles Shoreditch qualifying lessees to a 90 year extension added to their residual lease term (ie if your lease has fifty years left the statutory lease extension will provide a new term of 140 years). The reason of the valuation is to arrive at an opinion of the sum payable by the lessee to the freeholder for the purchase of the lease extension.
It is generally considered that a property with in excess of one hundred years remaining is worth approximately the equivalent as a freehold. Where an additional ninety years added to any lease with more than 30 years remaining, the property will be worth the same as a freehold for many years ahead.
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| Birmingham Midshires | Minimum 70 years from the date of the mortgage. |
| Halifax | Minimum 70 years from the date of the mortgage. |
| Virgin | 85 years at the time of completion. If it's less, we require it to be extended on or before completion. |
| 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 conveyancing solicitors that we work with procure 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.
Last Autumn Alfie, came dangerously close to the eighty-year mark with the lease on his studio flat in Shoreditch. Having purchased his property 19 years previously, the lease term was of no importance. by good luck, he recognised he would soon be paying an inflated amount for Extending the lease. Alfie arranged for a lease extension just under the wire in August. Alfie and the freeholder in the end settled on sum of £5,500 . If the lease had slid to less than 80 years, the sum would have increased by a minimum £1,100.
In 2011 we were called by Mrs Francesca Bennett who, having took over the lease of a basement apartment in Shoreditch in February 2007. The dilemma was if we could approximate the price could be for a ninety year lease extension. Similar properties in Shoreditch with 100 year plus lease were valued about £189,000. The mid-range ground rent payable was £55 invoiced per annum. The lease expired in 2079. Considering the 53 years outstanding we approximated the compensation to the freeholder to extend the lease to be between £28,500 and £33,000 plus expenses.
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 related to 2 flats. The unexpired term was 72.39 years.