If you’re thinking of selling a leasehold property, there are several important factors to keep in mind. Leasehold properties come with their own set of rules and regulations, and understanding these can make the selling process a smooth and successful one.
To help you on your way, here are some of the key considerations to take on board when selling a leasehold property.
What is a leasehold property?
A leasehold property is a type of property ownership arrangement where a person (known as the leaseholder) holds the right to use and occupy a property for a specific period of time as stipulated in a lease agreement with the freeholder (also known as the landlord).
Leasehold arrangements are common for various types of homes including flats, maisonettes, and even some houses.
How is selling a leasehold property different from selling a freehold property?
Leasehold properties can sell as fast as any property on the market, but things can slow down once the offer has been accepted.
This is because your buyer’s solicitor will need to carry out several extra steps before completion. As well as searches, contracts and all other typical conveyancing, your buyer’s solicitor will also need to:
Review your lease terms
Correspond with the landlord/freeholder
Review the management accounts
Identify any planned works
Ensure the mortgage lender’s requirements are being met
Investigate any disputes.
Once this is all completed, your buyer’s solicitor will share the information they have gathered with you and your mortgage lender.
Related: Is my house ready to sell?
How to sell a leasehold property
Look at the lease length and renewal
The first thing to assess is the remaining length of your lease. As a general rule of thumb, leases with less than 80 years remaining can make a property less attractive to buyers.
Mortgage lenders tend to be wary of such properties, which can affect the pool of potential buyers and the property's value. If your lease is approaching this critical threshold, it might be worth considering a lease extension to increase its marketability.
How to extend a lease?
Extending a lease provides potential buyers with peace of mind and can make your property more appealing, which may increase your asking price.
The process for extending a lease can be complex, involving negotiations and potential legal costs. However, it can be a worthwhile investment that pays off when you come to sell.
For advice about extending your lease, speak to your local agent who will be able to put you in touch with a solicitor who will manage this for you.
Be upfront about service charges and ground rent
Service charges and ground rent are typical costs associated with leasehold properties. When selling, it's essential to provide potential buyers with clear information about these charges.
The level of these costs can vary significantly between properties, so having a transparent breakdown will help build trust with prospective buyers.
List your maintenance and repair obligations
Leasehold properties often come with maintenance and repair obligations. Make sure you understand your responsibilities as a leaseholder and have documentation to prove compliance.
This information can reassure buyers that the property has been well-maintained and reduce the risk of disputes during the sale process.
Provide written permission for alterations
If you've made any alterations to your leasehold property, you should have obtained the necessary permissions in writing from the freeholder or management company.
Before you list your property, gather any documents that support this. Unauthorised changes can cause complications when selling and may require costly remedies.
Consider purchasing the freehold
Leaseholders often have a right of first refusal when the freeholder decides to sell the freehold. If this situation arises, you may have the opportunity to purchase the freehold jointly with other leaseholders. It's crucial to understand your rights and responsibilities in such cases.
Assemble an information pack for your buyer
When selling a leasehold property, you'll need to provide the buyer with an information pack, which includes details about the lease, service charges, ground rent, and other relevant documents. This pack must be provided within a specific timeframe, so it's essential to be organised to avoid delays in the sale.
Consult a solicitor
Navigating the complexities of selling a leasehold property can be challenging, so it's advisable to consult a solicitor experienced in leasehold transactions. They can guide you through the process, ensure all legal requirements are met, and help you avoid potential pitfalls.
Whether you’re buying, selling, renting, or letting, contact your local Ellis & Co agent for expert advice and guidance
