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Marketing your flat with a short lease for a swift sale Tue, 27 May 2014 16:05

Often, leaseholders don't fully realise the implications of their property having a short lease until they come to put it on the market. It's also customary for estate agents with such a flat on their books to underplay the consequences of a shorter lease, with common wordings in advertisements including 'TBC' and 'to be sold with a new lease'.

 

There are ways in which a leaseholder like you can more quickly sell a flat with a short lease, even if it would seem that you have an unmarketable property whereby the flat is only saleable to a cash buyer as typically mortgagees do not lend on flats where the lease is less than 70 years unexpired. Marriage value may take effect at the 80 year mark of a lease, but even leases that have not reached this point should be investigated and eventually extended.

 

The general rule is that those leaseholders that have owned their flat for more than two years have the right to extend it under the Leasehold Reform, Housing and Urban Development Act 1993. However, such a wait only makes it all the more important for even those with an 85 year lease to look into having it extended before too long.

 

Although the process is typically referred to as 'extending' the lease, you are instead technically acquiring a new lease with a length matching the previous term, plus 90 years. The lease tends to be on the same terms, while the ground rent reverts to a nominal or 'pepper corn' rate. To get the extension process underway, you will need to instruct a surveyor to produce a report and value the new lease's cost, followed by serving notice on your freeholder and invoking the Act.

 

A downside to this process, however, is the length of time that it is likely to take, with three months being a probable minimum and up to six months not being unheard of. This isn't ideal if you would like a sell a flat with a short lease quickly and possibly even have some prospective buyers lined up already. However, buyers can still complete the purchase and continue the process after the property is sold.

 

Another possibility for making your flat more marketable in the current market is approaching your freeholder for an extension outside the Act, although this is not often recommended in normal circumstances, given the greater premium that the leaseholder faces compared to proceeding under the Act.

 

That leaves one other clear option: opting to sell the flat with a short lease to a company that specialises in the quick purchase of such properties, such as Dream House Buyer. We are seasoned freeholders with an interest in buying leasehold flats with less than 80 years remaining - precisely the stage at which such a property often becomes extremely difficult to sell on the open market.



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