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Is it Hard to Sell a Leasehold Property?

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Is it Hard to Sell a Leasehold Property?
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It is estimated that there are around 4.86 million leasehold properties in the UK, accounting for 20% of the housing stock. If you’re reading this article, there’s a good chance you’re one of the 20% and you’re asking yourself, how hard is it to sell a leasehold property?

Short answer: selling a leasehold property is harder than selling a freehold property.

In this guide, we help you understand what a leasehold property is and what you need to know about selling your leasehold property.

What is a leasehold property?

Put simply, a leasehold property is property that sits on land owned by a third-party. This third party is known as the freeholder, while the person who owns the property is known as the leaseholder. As the name suggests, a lease exists to allow the property owner to have property on the freeholders land. This lease can be for any length of time, up to and including 999 years.

Now, 999 years may seem excessive, but this would actually be a blessing for a property owner. Once a lease term ends, the land (and any property on it) would be returned to the freeholder, even if the freeholder had paid off their mortgage. Because of this, there is a clear agreement drawn up to outline any responsibilities between the parties. This will also outline the fees that need to be paid by the leaseholder. Yes, the fees.

As you don’t own the land the property is on, you’ll rent the land your property is on from the freeholder, a fee known as ground rent. You may also have to pay a service charge, maintenance and a share of the building’s insurance. The lease is binding, so if the terms weren’t adhered to, the contract would be forfeited and they would be forced to leave.

Can you sell a leasehold property?

Yes, you can sell a leasehold property — but you’ll have to get your ducks in a row first.

When you sell a leasehold property, the lease goes with it. The new owner of the property will also have to honour (and adhere to) everything that was in the original contract, fees and all.

For the most part, the process for selling a leasehold property is similar to a normal property. You’ll most likely appoint an estate agent to sell your home, and a solicitor to deal with the conveyancing.

Once you’ve had an offer accepted, your solicitor would prepare a contract of sale for the prospective buyer. The only difference is that they would also send the lease agreement and a copy of both your title and the freeholder’s title. You may also have to provide the building’s insurance schedule and annual accounts for the managing agent, but this will vary on a case by case basis. 

Once the buyer has received all the above and is happy to proceed, the freeholder is formally notified that the lease has been transferred.

Is it hard to sell a leasehold property?

There’s no straight answer to ‘is it hard to sell a leasehold property’, but there are things that need to be considered when you buy one. There can be a number of potential issues that can put a potential buyer off a leasehold property, such as:

  • Length of lease: If you have a lease with less than 75 years remaining, then selling the property will be difficult. Properties with a short lease make it notoriously hard to get a mortgage, with most lenders refusing to lend on properties with a short lease. In this scenario, you’re looking for a cash buyer, which aren’t so common.
  • Property condition: This isn’t unique to leasehold properties, but universal when it comes to selling a home. If a property isn’t in great condition, it’s not going to be an easy sell. At least, not for the right price.
  • Lease terms: Anyone buyer who is considering buying a leasehold property will have a solicitor go through the terms of the lease with a fine tooth comb. Close attention will be paid to ground rent terms, the cost of the service charge, building insurance, and any terms impacting the sale of the property in the future. If any of these don’t look desirable, it goes without saying the property will be harder to sell. Potential buyers can then renegotiate the price, or pull out of the sale altogether.

Things to consider when selling a leasehold property

Research from the National Association of Estate Agents found that 94% of leasehold owners regretted their decision to buy. Many feel homes were mis-sold to them, but this often comes from a lack of understanding around leasehold properties and the difficulties they may face when it comes to selling.

If you’re looking to sell a leasehold property, ensure you have as much information as early as possible in the process. Buyers will have questions around the lease, the ground rent and the service charges, so be in a position to answer these.

It’s also worth considering extending your lease if you’re under the 70-80 year mark. Weigh up whether the costs involved with extending the lease will be worth the value it can add to the property.

Sell your house fast with WeBuyAnyHome

WeBuyAnyHome are chain-free cash house buyers who can purchase your property up-front and quickly, without hassle or stress. We offer the perfect opportunity for you to sell your house fast whether it is one you live in yourself or whether you are selling a house with tenants in situ.

Any location, any condition, we buy any house. We can provide you with an offer for your UK property – Cardiff to Clyde, Durham to Dover. Our specialist team have helped assist thousands of people to a quick and stress-free house sale.

Click on this link if you want more guidance on the difference between leasehold and freehold.

Fill in our enquiry form below if you are interested in getting a cash offer for your house.

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