The market value of Shoreditch leasehold residential property falls as the lease term becomes shorter and this will have an impact on its saleability. The expense of extending the lease can increase significantly once the remaining term is less than eighty years
Leasehold residencies in Shoreditch with in excess of 100 years unexpired on the lease are sometimes regarded as a ‘virtual freehold’. This is where the lease value the same as a freehold interest in your home. In such circumstances there is often little upside in purchasing the freehold unless savings on ground rent and estate charges warrant it.
| Lender | Requirement |
|---|---|
| Barnsley Building Society | 60 years from the date of the mortgage application subject to 35 years remaining at the end of the mortgage term. |
| Godiva Mortgages | 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. |
| Royal Bank of Scotland | Mortgage term plus 30 years. |
| 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 undertake 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.
Hunter owned a 2 bedroom flat in Shoreditch being sold with a lease of fraction over 61 years unexpired. Hunter informally approached his landlord being a well known local-based freehold company and enquired on a premium to extend the lease. The freeholder indicated a willingness to grant an extension taking the lease to 125 years on the basis of a rise in the rent to £125 annually. Ordinarily, ground rent would not be due on a lease extension were Hunter to invoke his statutory right. Hunter obtained expert legal guidance and secured satisfactory resolution informally and sell the flat.
In 2011 we were phoned by Dr S Lefèvre who, having bought a ground floor apartment in Shoreditch in April 1998. We are asked if we could estimate the price could be for a ninety year lease extension. Identical properties in Shoreditch with 100 year plus lease were valued about £210,000. The mid-range amount of ground rent was £50 collected monthly. The lease end date was in 2106. Having 80 years as a residual term we calculated the premium to the landlord for the lease extension to be within £8,600 and £9,800 exclusive of professional charges.
An example of a Lease Extension decision 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.