So you are selling a property with a short lease? A property that has a short lease of 85 years or less can be very difficult to sell. This is because of prohibitively expensive cost of renewing the lease that can easily run into tens of thousands of pounds. You will also have to pay for the freeholders’ legal costs too. This can be upwards of £2,000 plus VAT at the lower end of the scale.
Any potential would-be buyer would expect you, as the owner, to renew the lease for the purchase of property. This is not always possible because of substantial upfront investment required to renew the lease. Leases that have under 85 years left are a huge warning sign to any would-be buyers. This is because when a lease has 80 years left marriage fees are payable on top of legal costs and charges of renewables.
The marriage fee is also known as marriage value. When a lease has less than 80 years left, the freeholder is entitled to half the increase in value of the property as a result of extending the lease. The term derived from total value of the property plus the longer lease when married together exceeds the value of its separate parts. The marriage free is an estimated value and forms part of the premium or in other words, the offer made to the freeholder to purchase the lease.
This video from Bernie Wales, a short lease expert, explains how short leases can affect value of a property:
Credit: Bernie Wales
So what are my options if I am looking to sell a property with a short lease?
Unless you have access to huge amount of money it’s almost impossible to renew the lease. In this situation a true cash house buyer such as Property Saviour can help. We will buy any property that has a short lease anywhere in the UK. All you have to do is make an enquiry online. It takes just 60 seconds to fill in a simple form.
If you happen to have the funds to extend a lease then these other two possibilities of how to approach the freeholder to extending the lease:
- The formal approach: You have to make a formal application to the freeholder under the Leasehold Reform Housing and Urban Development Act 1993. This involves serving a Section 42 notice. However there is quite a lot of preparation required to ensure that it is done correctly because a faulty notice can cause substantial delays. it should be prepared by a solicitor specialising in lease extensions to ensure that is incorrect correctly filled and served.
- The informal route: This involves simply writing a letter to the freeholder requesting that you wish to extend your lease. This is a much quicker method and you should request no less than 125-year extension. There are no notices and no statutory time periods. The premium for extending the lease is up for negotiation between yourself, as a leaseholder and owner of a property, and your freeholder. If for any reason the freeholder has failed to reply is being slow or otherwise simply not responding then you can revert to option 1 to ensure that you’re not wasting anymore time.
When you’re selling a property with a short lease it’s important that use get independent legal advice from a competent lawyer who specialises in lease extensions to ensure that you have considered all possibilities when it comes to selling a property with short lease. as the lease of property becomes even shorter it becomes even more difficult for any buyer to purchase the property, and of course the premium payable to the freeholder increases as the years pass. whilst extending the lease can increase the value of the property, by the time you have factored in the additional premium, it may not be so feasible to do so.
If you do sell your property with a short lease then the new leaseholder doesn’t have the right to extend a lease for a minimum of 2 years after the purchase. In some cases if the freeholder is contactable and is serious about extending the lease, the buyer can at his own cost extend the lease at the same time of conveyancing. the buyer will also become liable to pay for freeholders legal costs. This means that the property needs to be realistically priced 4 and a 74 year lease. As you can appreciate many buyers are not prepared to take the risk of extending the lease whilst they haven’t purchased the property. Therefore a specialist purchaser such as property surveyor can help. we are ready to purchase a property with a short lease. please call us on 0113 320 6700.
How much does a lease extension cost?
We have already touched on this subject however, if there is a disagreement between the freeholder and leaseholder done the leaseholder can appoint a valuer to come up with a valuation for extending the lease. This can work for you as well as work against you.
Selling a flat with a short lease
Before 2009 many properties were being sold with relatively short leases however as the supply of money was abundant this wasn’t an issue. This has completely changed following the financial meltdown, and the lending criteria is now so strict that leaving discretionary purchases such as gym membership and trips to the cinema are frowned upon.
In the last few years even the new build properties Flats and houses have been sold with punitive leases where the ground rents double every 5 or 10 years. this is substantially reduce the value of the properties and whilst the government has intervened and vowed to change the law, it means that many owner occupiers are stuck unable to move or sell their properties.
Property Saviour are specialist when it comes to selling a property with a short lease. Because we are genuine cash buyers we are in a position to purchase a property with a short lease quickly and without any delay. We can also make a contribution towards a legal cost of £500. Of course you’re welcome to use your own solicitor if you wish as long as you’re happy that they will deliver within timescale that you wish to sell your property. We know from experience that not many other so-called cash buying companies can do that. Because many will insist that you use their solicitors to act for you – a clear conflict of interest.
We have many 5-star reviews that you can read on our website and on TrustPilot knowing fully well are you are selling to a reputable company. To find out how we can help all you have to do is make an online enquiry today and we will get back to you as soon as possible usually within 24 hours.