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Live/Work Properties in Shoreditch

Originally thought up for those who wanted to live and work from home, live/work was a common theme in areas like Shoreditch in the mid nineties and a great cost saver for example, for creative types who couldn't afford a studio space as well as their home. The idea was eventually abused by developers who used it as a way to get around planning, ultimately building live/work properties to comply with planning restrictions in a particular area, but on the understanding the majority of purchasers had absolutely no intention of working from said properties, for most, they were simply a home.

The clue is in the heading but as specified in the lease 'most' live/work properties you are legally obliged to do exactly that,' live and work' from them, which can cause no end of problems, particularly when they are generally purchased by people with absolutely no intention of working from them. This can present problems and regularly does;

Even if a buyer accepts they have no problem with the live/work property and the lender has no problem (many lenders will not lend on live/work) unless the purchaser can confirm with their lender that they do work from home on a regular basis, as far as the lender is concerned you will be in breach of lease and they won't lend to you. This leaves the selller with two options;

1. Find another buyer who genuinely does work from home or a buyer that's prepared to tell their lender what they want to hear.

2. Change the use from live/work to live only.

Given that 'most' live/work properties we deal with have only ever been used as residential (live) properties, and by that I mean they have only ever paid residential council tax and utilities and never run a business from the premises, you can very easily get existing use via the council, though it is an 8 week turnaround. The problem here, in order to fully comply, you not only require an acceptance of use via the council, you also require a 'deed of variation' on the lease, otherwise you've only done half the job and the lender will still look at it as though it is live/work. This consists of a change of wording in the lease from something 'along the lines of 'must be used for and live work purposes only' to 'can be used for live and work and or live purposes only'.

Simple right, well it is, but this is where the real problems begin. Freeholders have cottoned on to the fact live/work are more difficult to sell and the deed of variation can seriously help with re-sale purposes, due to that fact, they can and do charge exorbitant amounts of money for that simple change of wording. I've seen instances where they demand as much as 7.5% of the properties value, which, when you consider the average asking price in Shoreditch is £850,000, is a whopping £63,750.

It's not all doom and gloom, we sell many live/work properties that haven't had the change of use or deed of variation, but it's vitally important you understand the potential problems you can face as someone looking to sell their live/work property. I would urge you to have discussions with ourselves before you market your property so there are no un-expected delays/issues once you have decided to come to market.

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