06 Mar The Ultimate Guide to Selling a Leasehold Property
If you own a leasehold property, you may be wondering if it’s possible to sell it on in the future. The good news is that selling a leasehold home is simpler than it may first appear, but it does require a bit more planning and a few additional documents compared to a freehold home. In this guide, we’ll explore the documents you’ll need to sell your home, how the leasehold affects the sale, and how to attract a fast buyer for a stress-free sale.
What Does Owning a Leasehold Mean?
Most leasehold properties are flats, but shared ownership properties can also come with a leasehold rather than a freehold. It shouldn’t be off-putting to buyers, as it’s a completely normal part of the UK property market and it’s actually rarer for a flat to be freehold than leasehold. Owning the leasehold means that the flat, or property, itself is yours but you don’t own the ground or land it stands on, nor do you own the communal areas of the building. These belong to the freeholder.
A leaseholder typically pays ground rent and a service charge to the freeholder who will then use this money to maintain the building as a whole and any shared areas, like gardens or entranceways. Your lease doesn’t last forever—it has a fixed term and when it’s over, the ownership of the property will transfer back to the freeholder, although this rarely happens as the lease can be extended.
Is Selling a Leasehold Property More Difficult?
Owners may worry that a leasehold property will be harder to sell, but this isn’t usually the case. Provided you have over 90 years remaining on the lease itself, you shouldn’t have any issues with selling the property.
But there are a few ways you can improve the likelihood of your property being more attractive to buyers to sell your home instantly. For example, keeping the property well-maintained, as with any home, is essential and that’s your responsibility as the owner. Similarly, you can add features that will appeal to buyers, such as home automation features and energy-efficient upgrades.
There are a few factors that could hinder your ability to sell your leasehold home. For example, unfair service charges or ground rent fees will increase a potential buyer’s monthly expenses and could put them off the property. There might also be specific clauses in the lease such as requiring carpets instead of wooden floors to prevent excessive noise, or rules about how the property is used, which might affect who the home works for. Another factor that could make selling a leasehold more difficult is an absent or inactive freeholder, as they will be involved in the sale process.
What Does the Process of Selling a Leasehold Property Involve?
Have the Property Valued
The first step to selling a leasehold is to have the property valued. Once you know what you can get, based on the features and condition of the home, and local market values, you’ll need to check the length of the lease. You don’t want to start marketing the property without knowing this information because it can affect not only the price but also the saleability. Generally speaking, the longer the lease, the better. Some may be as long as 999 years, while others will be less than 99 years.
Extend or Buy the Leasehold
If you have a short lease, you can extend it if you’ve owned the property for at least two years, as you have a statutory right to extension. If you haven’t owned for this length of time, you can also approach the freeholder informally to ask if it’s possible to extend. This will come with a cost so do your research beforehand.
Another option is to buy the freehold, either alone or by teaming up with other leaseholders in the building to buy it together, which is also known as collective enfranchisement. Leasehold reform has made this process easier for leasehold owners and gives you more rights than previously granted.
Gather the Necessary Documents
You’ll then need to gather the necessary documents for the sale. This primarily involves a copy of your lease, which outlines the rights and responsibilities of the leaseholder. You will also need to complete a Leasehold Information Pack which may be referred to as a TA7 form. This document outlines details such as the service charges, ground rent, and maintenance fees, any upcoming maintenance works to the building, insurance policies, and any external wall fire reviews.
Any buyer will want to see this information before they put in an offer, so having everything prepared in advance will make the sale much smoother and prevent any buyers pulling out of the sale due to miscommunication.
Enlist a Solicitor
Once your property is in the right condition for sale, you’re in a good position to accept an offer and get the sale process underway. The next crucial step is to enlist a solicitor or conveyancer—ideally one who has experience in selling leasehold properties.
Selling a leasehold property doesn’t need to be complicated. In fact, with a bit of forward planning and the right documents to hand, you can enjoy a hassle-free process. There are a few differences between a leasehold and freehold sale, so the timescale could be slightly longer. To speed up the completion, make sure you do your research in advance, to have everything in place for a speedier sale.