A leasehold refers to a property (normally a flat) that has been rented from the owner for a number of years (the lease). This means you own the bricks and mortar but not the land it is built on, and only for a set period of time. In the UK, the vast majority of flats are leasehold, it is possible for houses to be leasehold although this is relatively rare.
When a property is purchased from a freeholder (sometimes called a landlord) a new lease will normally be negotiated and allocated to the property, new leases are generally between 99 and 999 years, although it is possible to purchase a lease midway through its duration from a leaseholder.
When the lease ends, the property reverts back to the freeholder’s control. That means that you may be entirely debt free on the property, and have lived there for decades, but will still lose ownership of it to the freeholder, this makes a short lease property a potentially problematic asset to own.
Extending a lease is likely to be a long and costly process, so ensure you have expert support and funds ready before attempting. Lease extensions can be requested by serving what is called a section 42 to your freeholder, after a period of negotiation a price is agreed upon (or set by a court if you cannot agree) at which point you are able to extend your lease. This can potentially cost tens of thousands of pounds depending on the property value and lease length as well as thousands of pounds in legal fees and months of negotiation and legal wrangling.
Read our detailed article all about the difference between freehold and leasehold today.
At Gaffsy, we have the track record and experience to purchase your short lease property, if you have a property with a short lease and don’t want to face the costs and inconvenience of a lengthy lease renewal process, call us on 0207 459 4546 for a free cash offer. We buy any home, in any condition, in any UK location.
Can you sell a flat with a short lease?
Yes, but it is far from simple. There are a number of factors to consider when selling, all of which will affect both the price and the number of buyers likely to be interested. Most importantly, these detrimental effects to the value will increase as the lease gets shorter, the negative effect on price will spike especially when the lease length becomes less than 80 years.
One of the main issues you are likely to face as the owner of a short lease flat on the open market, is that most lenders will not offer a mortgage on a short lease property due to the risks. Those that will, do so at far higher interest rates to mitigate their increased risk. This means your property can most likely only be sold to a cash buyer, meaning someone who has the full amount at their disposal to complete the sale. The vast majority of buyers in the UK are reliant on a mortgage, therefore by requiring exclusively cash, your pool of potential purchasers is vastly reduced, this lack of interest can mean that it will sit on the market for many months, further reducing it’s value.
Gaffsy are some of the property industry’s leading short lease experts, while other buyers may be turned off by a lease below 80 years, we pledge to make a fair offer and help you sell your house fast. If you’re selling a short lease property, please do give us a call today on 0207 459 4546.
The legal side of a short lease sale is also more challenging than a typical sale, often the buyer will request certain forms are submitted and a section 42 is served by the current owner. All of this means a competent and experienced solicitor is absolutely vital, at Gaffsy, we will recommend a totally independent solicitor to represent you, chosen because they have a track record in short leases and have demonstrated they can move quickly and efficiently on property sales. The best part about it is, we will even cover their fees! Gaffsy never charge for extra costs when purchasing property, meaning 100% of the offered amount will be received into your account! That’s part of our pledge, as a property buyer you can trust.