If you possess a leasehold property its ownership will revert to the freehold owner (landlord) when the lease expires. While leases are often renewed, this is not guaranteed.
In addition, the closer your lease gets to its expiry date the less your property will be worth. If you wish to sell a leasehold property, you should know that Open Property Group will offer you a cash sum regardless of the lease length…
Freehold vs. leasehold
If you buy a freehold property you are its sole owner. However, if you own a leasehold property you do not own the land on which it sits. Your lease is a contract between you and a landlord (also known as the freeholder). It gives you the right to live in the property and to sell that right to someone else. A lease usually lasts for a set period of 99-125 years.
Your lease defines your rights and obligations as property owner/leaseholder and those of the freehold owner. It will set out ground rent and service charges that you have to pay. The landlord is usually responsible for insurance, waste collection and the upkeep of communal areas.
Why does leasehold property lose value?
If a property has less than 80 years left before its lease expires it is known as a ‘short leasehold’. In becoming a short lease property your home may lose 10-20% of its value, while premiums are also likely to rise dramatically.
This is partly due what is known as ‘marriage value’. This measures the value of the property once the landlord grants an extension. To extend the lease, the law states that you must pay 50% of this marriage value as compensation to your landlord.
Problems selling a short lease property
It can be very hard to sell a leasehold property with less than 80 years until expiry. Many mortgage lenders refuse to finance the purchase of a home on a short lease, which in turn makes finding a buyer much more difficult. In some cases, the short lease property will become unsaleable. Often the only option is to extend the lease, but that comes with its own issues…
Problems with extending a lease
To extend your lease, you must have owned the property for two years or more. When serving your landlord with notice for an extension you are liable for all legal and valuation costs.
While you can organise the leasehold extension yourself, this is not advisable as doing so could put you in a legal minefield. It is best to seek professional help from a valuer. This will tell you the property’s true value and therefore give you an idea of how much you need to pay the landlord before he or she grants an extension.
Meanwhile, hiring a solicitor will better prepare you for gathering information, making your offer and responding to any requests from your landlord. However, seeking professional help obviously comes at even greater cost.
If your landlord accepts your application to extend, this will add 90 years to the lease period. If you and the landlord cannot agree on a price for the extension, you can seek impartial resolution from the Leasehold Valuation Tribunal (LVT). However, it is worth noting that this can be a long and expensive process.
The process of selling a short leasehold property can be fraught with issues. With less than 80 years left on a lease, a property will begin to decrease drastically in value. To resolve this issue, you can apply to extend the lease, but this can take a lot of time money and stress.
This is especially true if you and your landlord cannot reach an agreement or you are unable to contact them. If only there was a way to be free of valuers, solicitors, tribunals, and a home worth less and less every day…
Here at Open Property Group, we make it easy to sell a leasehold property. We do this by offering a 100% cash sum for your home. Whether you are selling a house, flat or maisonette with a long or short lease, please get in touch.
What separates us from our competitors?
Unlike many of our rivals, we do not wish to write to the freehold owner to discuss terms and costs. Instead, we will make you an offer to buy your property in its current form on the very same day we receive your call. To sell your leasehold property now, please call Open Property Group on 0800 990 3939.
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