I want to sell my leasehold property but I only have a short lease, what are my options?
If you are in the position that you own a leasehold property (usually a flat / apartment or maisonette) and only have a short lease remaining your property is likely to be un-mortgageable and you will have difficulty selling it, or achieving the maximum price. If you want to move home, what are your choices?
Very broadly speaking you have four options.
1) You can sell your property to a cash purchaser, but this will obviously limit the number of potential buyers and therefore the achievable price. But could be done quickly, especially if you chose to sell via auction. You would be best speaking to a knowledgeable local estate agent who could advise you on the options available in your location to find a cash buyer. This option is quick, but not cheap as you will limit your achievable selling price. Although the ‘up-front’ costs are fairly low.
2) You can ‘serve notice’ on your freeholder immediately prior to completion, and then pass the benefit of the notice to the new owners to complete the lease extension. This option would allow you to potentially achieve a slightly higher price for the property but not as much as selling with a long lease. You would have to employ a surveyor to calculate the figure to put in the lease extension notice, and a good, experienced, solicitor who is familiar with both the conveyancing process and the lease extension process. A simple error from the solicitors can potentially have disastrous consequences and as leasehold enfranchisement is a very specialist area of law you would need to do your research carefully before deciding on a solicitor. The bulk conveyancing practices that operate primarily online and via telephone are highly unlikely to be able to do this correctly (even if they say they can!). This option is something of a ‘halfway house’ between speed and cost.
3) You can undertake a formal lease extension with your freeholder before putting the property on the market. This would allow you to get the maximum selling price for the property but can be costly both in terms of timescale and financially. You would have to employ a surveyor to calculate the premium and undertake the negotiations; and a solicitor to complete the lease extension. If the freeholder is un-cooperative then the process potentially could end up at tribunal, adding further costs and time to the whole matter. You would likely end up having to find the funds for both the professional fees AND the premium (which can be potentially be 10’s of £000’s)
4) You could undertake an informal lease extension with your freeholder (assuming they are willing to co-operate), this can be a fairly quick process (compared with a ‘formal’ lease extension) but you will almost certainly end up paying ‘over the odds’ for the lease extension and you would have to be extremely careful that whatever ground rent is agreed going forward is not going to make the property un-mortgageable. It is essential you receive correct professional advice on this. (As unlike a formal lease extension you will likely have to agree to a continuing ground rent). This option can potentially be quick and assuming that you have a good solicitor, the matter could be tied in with the sale so the premium you have to pay is taken from the sale proceeds of the property, therefore limiting your up-front costs.
Which option is right for you, only you will know. Your choice is one of balancing the need to achieve a quick sale with the need to achieve the highest possible price for the property.
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