Q. What is a lease?
A. A lease is a legal agreement that enables you to own a property for a fixed amount of time – usually expressed in years. When the lease comes to an end, ownership of the property returns to the landlord.
Q. What type of property will have a lease?
A. Most flats and many maisonettes are leasehold. Houses can be leasehold too, especially if they have been bought through a shared ownership scheme.
Q. When is a lease considered short?
A. Although it sounds a long time, the Royal Institute of Chartered Surveyors suggests that a lease of 70 years or less is considered ‘short’. Although mortgage lenders each have their own minimum lease length that they will lend on, the general industry standard is 80 years – any less and the lender may refuse the loan.
Q Can I sell a property with a lease of less than 70 years?
A. Yes, you can sell a property with a short lease but the shorter the lease, the harder it will be to sell on the open market with a High Street agent. Options include the current owner paying to extend the lease before they sell, or selling the property with a short lease and accepting an offer below the market value.
Q Why is a short lease an issue when it comes to selling?
A. When selling a property with a short lease, it can be difficult for a potential buyer to raise a mortgage. Many lenders will be less willing to lend because properties lose value quickly as the lease gets shorter. Remember that any prospective buyer will factor in the cost of the lease extension too, reducing the price you will receive. This means that short lease properties are typically sold at a significant discount from the market value.
Q. What options are open to the property owner?
A. You have a couple of options if you find yourself with a short lease:
- Apply for a lease extension, although this can be very expensive and complicated to arrange
- Sell your property via a traditional estate agent at a discount, below the market value of a similar property with a longer lease.
- Sell to a professional cash buyer who specialises in purchasing short lease properties
Q. Who would buy a property with a short lease?
A. Because mortgage lenders are frequently unwilling to lend against a property with a short lease, a cash buyer is likely to be your best option. It’s important to choose a professional cash buyer that is experienced and has a good reputation. Open Property Group specialises in buying properties with short leases – even those that are in single digits.
How we can help
We can provide a guaranteed cash offer for your flat or maisonette, regardless of the length of its lease. Our friendly, professional team is on hand to talk you through the process, and we can offer you completion in as little as seven working days. Get in touch to find out how we can help, or start the sale of a short lease property with one of our online valuations.
Watch the video below which explains more about selling your property fast or click here to continue reading this article