Selling short leasehold flats and the challenges
If you are selling or even thinking about selling a leasehold flat you should be concerned about the remaining number of years left on your lease. Put simply if you have 80 years or more on the term of your lease then you should be fine. Mortgage companies are happy to lend on leasehold properties with over 80 years remaining and this in turn means that there is a market of ready buyers. If you have ready buyers then you should be able to achieve a sale at open market value.
The complications begin once a property has 80 years or less remaining on the lease.
Selling short leasehold flats under 80 years
Once the lease falls below 80 years then the premium payable for extending the lease starts to increase exponentially as the lease term becomes shorter. Many buyers will be put off buying the flat for this reason.
Selling short leasehold flats under 70 years
Once the lease falls under 70 years many mortgage lenders will no longer lend against the flat. This will reduce the saleability and value of the flat even further.
2 year ownership period before applying for leasehold extension
You must also remember that you only have the right to extend your lease if you have owned your leasehold flat for more than two years. For example, if you purchased a flat with 81 years remaining on the lease you will have to wait 2 years until it has 79 years remaining before you can extend the lease. At which point the lease extension cost will have risen dramatically compared to the lease extension cost at 81 years.
What should you do?
The first golden rule is to make sure the lease is extended well before it reaches the 80 year deadline. The lease can be extended relatively inexpensively during this period.
If your lease term is already under 80 years then you can try and sell your flat on the open market but the experience could be frustrating. Alternatively, you can bite the bullet and apply to extend the lease. You will need to contact a surveyor to value the lease extension and appoint a solicitor to serve what is called a section 42 notice on the freeholder. You will incur professional fees and you will need to wait between 4-12 months depending on how efficiently the various parties respond and communicate.
Providing you have the time and patience then the extended lease will make your flat more marketable and it will more than likely increase the value of your flat. Don’t forget you will also need finance to purchase the lease extension once all the legal formalities are agreed.
On the other hand, if you’re thinking to yourself:
- I don’t have the time and I need to sell my flat quickly
- I can not be bothered with this leasehold extension palava
- I don’t have the finances in place to buy the lease extension
then Molae Properties can simplify matters for you. We are interested in buying leasehold flats with short leases under 80 years. We will buy your short leasehold flat for cash in a quick, guaranteed and efficient manner. Simply call us or fill out the contact form on this page and we will be in touch with you to discuss the sale of your flat.