So, you are selling a property with a short lease? Whether you have a residential or commercial property with a short lease of 75 years or less, it can be difficult to sell.
This is because of the prohibitively expensive cost of renewing the lease, which can easily run into tens of thousands of pounds. You will also have to pay for the freeholders’ legal costs. This can be upwards of £2,000 plus VAT at the lower end of the scale.
Any potential would-be buyer would expect you, as the owner, to renew the lease for the purchase of the property. This is not always possible because of the substantial upfront investment required to renew the lease.
Leases under 85 years left are a huge warning sign to any would-be buyers. This is because when a lease has 80 years left, marriage fees are payable on top of legal costs and charges of renewables.
UK Government’s Leasehold Reforms Ground Rent Act 2022 has abolished ground rents for all newly built properties.
Have you considered using our We Buy Any House service that allows you to sell your property with a short lease, enabling you to move on in days rather than face uncertainty?
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What happens if I am selling a commercial property with a short lease?
With commercial properties, the freeholder is not obliged to extend the lease, so a commercial property’s value is significantly diminished if you are trying to sell it with a short lease. At the end of the lease, the freeholder will take over the property and do as he/he wishes with it.
Any commercial property with a short lease is much harder to sell as banks are reluctant to lend against it. Effectively the value of the leasehold commercial property goes down as each lease year passes.
The good news is that Property Saviour will buy a commercial property with a short lease. If you need to sell your commercial property fast, we are the ones to trust.
We are professional commercial property buyers who will act decisively by making you a cash offer, and if you accept, we will complete the purchase within 3 weeks or quicker, covering all of your selling fees.
Please note that this applies only if you are the owner of a leasehold commercial property and doesn’t apply to tenanted commercial properties. We also buy tenanted commercial properties, but we can’t purchase the business.
How much does a short lease devalue a property?
The marriage fee is also known as the marriage value. When a lease has less than 80 years left, the freeholder is entitled to half the increase in value of the property because of extending the lease.
The term derived from the total value of the property plus the longer lease when married together exceeds the value of its separate parts. The marriage free is an estimated value and forms part of the premium or, in other words, the offer made to the freeholder to purchase the lease.
So, what are my options if I am looking to sell a house with a short lease?
Unless you have access to a huge amount of money, it is almost impossible to renew the lease. In this situation, a true cash house buyer such as Property Saviour can help.
We will buy any property with a short lease anywhere in the UK. All you have to do is enquire online. It takes just 60 seconds to fill in a simple form.
If you happen to have the funds to extend a lease, then these other two possibilities of how to approach the freeholder to extend the lease:
- The formal approach: You must make a formal application to the freeholder under the Leasehold Reform Housing and Urban Development Act 1993. This involves serving a Section 42 notice.
However, there is quite a lot of preparation required to ensure that it is done correctly because a faulty notice can cause substantial delays. It should be prepared by a solicitor specialising in lease extensions to ensure that it is correctly filled and served.
- The informal route: This involves simply writing a letter to the freeholder requesting that you wish to extend your lease. This is a much quicker method, and you should request no less than a 125-year extension.
There are no notices and no statutory periods. The premium for extending the lease is up for negotiation between yourself, as a leaseholder and owner of a property, and your freeholder. If, for any reason, the freeholder has failed to reply, is being slow or otherwise simply not responding, then you can revert to option one to ensure that you are not wasting any more time.
When you are selling a property with a short lease, use must get independent legal advice from a competent lawyer who specialises in lease extensions to ensure that you have considered all possibilities when it comes to selling a property with a short lease.
As the lease of property becomes even shorter, it becomes even more difficult for any buyer to purchase the property, and of course, the premium payable to the freeholder increases as the years pass. Whilst extending the lease can increase the value of the property, by the time you have factored in the additional premium, it may not be so feasible to do so.
If you do sell your property with a short lease, then the new leaseholder does not have the right to extend a lease for a minimum of 2 years after the purchase. In some cases, if the freeholder is contactable and is serious about extending the lease, the buyer can, at his own cost, extend the lease at the same time as conveyancing.
The buyer will also become liable to pay for freeholders’ legal costs. This means that the property needs to be realistically priced. As you can appreciate, buyers are not prepared to take the risk of extending the lease whilst they have not purchased the property.
Therefore, a specialist purchaser, such as Property Saviour, can help. We are ready to purchase a property with a short lease. please call us on 0113 320 6700.
How much does a lease extension cost?
We have already touched on this subject; however, if there is a disagreement between the freeholder and the leaseholder, the leaseholder can appoint a valuer to come up with a valuation for extending the lease.
This can work for you as well as work against you.
Selling a flat with a short lease
Before 2009 many properties were being sold with short leases however as the supply of money was abundant this was not an issue. This has completely changed following the financial meltdown, and the lending criteria are now so strict that buyers are expected to give up discretionary purchases such as gym membership and trips to the cinema.
In the last few years, even the newly built properties, flats, and houses have been sold with punitive leases where the ground rents double every 5 or 10 years. This has reduced the value of the properties, and whilst the government has intervened and vowed to change the law, it means that many owner-occupiers are stuck unable to move or sell their properties.
Conclusion
Property Saviours are specialist buyers when it comes to selling a property with a short lease. Because we are genuine cash buyers, we are in a position to purchase a property with a short lease quickly and without any delay.
We can also contribute £1,500 towards your legal cost. Of course, you’re welcome to use your solicitor if you wish if you are happy that they will deliver within the timescale that you wish to sell your property.
We have many 5-star reviews left by homeowners like you. You know that you are selling to a reputable company. To find out how we can help, all you have to do is make an online enquiry today, and we will get back to you as soon as possible usually within 24 hours.
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Property Saviour Price Promise
- The price we’ll offer is the price that you will receive with no hidden deductions.
- Be careful with ‘cash buyers’ who require a valuation needed for a mortgage or bridging loan.
- These valuations or surveys result in delays and price reductions later on.
- We are cash buyers. There are no surveys.
- We always provide proof of funds with every formal offer issued.
We'll Pay £1,500 Towards Your Legal Fees
- No long exclusivity agreement to sign because we are the buyers.
- You are welcome to use your own solicitor.
- If you don’t have one, we can ask our solicitors for recommendations.
- We share our solicitor’s details and issue a Memorandum of Sale.
Sell With Certainty & Speed
- Our approach is transparent and ethical, which is why sellers trust us.
- 100% Discretion guaranteed.
- If you have another buyer, you can put us in a contracts race to see who completes first.
- Complete in 10 days or at a timescale that works for you. You are in control.
