Associate and Leasehold Specialist discusses sell flat with a short lease and how short leases can affect a property’s value.
Short Lease
You’re flat, whether in a purpose-built block or a converted house is likely leasehold. This means you can live in the flat during the lease.
If the lease has 85 years left, you can buy and sell the flat for that long. The lease will shorten over time.
Do Short Leases Devalue A Property?
As the lease gets shorter, mortgage lenders lose interest in it.
Banks and building societies have different lease criteria.
Short Leases Devalue A Property How Much?
A flat with a short lease may lose 10-20% of its value. To find out how much, consult a lease extension specialist.
Once a lease has less than 80 years left, marriage value is considered.
Can You Sell My Short-Term Flat?
Yes, you can ask your landlord for an extension. If this fails, you can get a lease extension under the Leasehold Reform Housing and Urban Development Act 1993.
Short Lease Property Sale
If you can’t afford to extend your lease before you sell, you can transfer it to your buyer.
Just start the legal process for a lease extension between exchange and completion, and the buyer can take over.
Should You Renew My Lease?
It depends on when you need to sell and how long the lease is. As a lease age, so does its value.
Because some lenders won’t lend on a flat with a short lease, it’s best to extend the lease before 80 years.
Cost To Extend A Short Lease
First, get valuation advice. We can connect you with a qualified valuer. They’ll tell you the extension fee. Contact our lawyers here.
Does The Buyer Or Seller Pay To Extend A Lease?
Who pays the extension premium and costs? If the buyer pays the market price, the seller should extend the lease.
If the buyer’s market price is discounted to account for the lease extension, the buyer should pay for it.
When To Renew You Lease?
If possible, extend your lease before the unexpired term reaches 80 years. As the lease term decreases, your flat’s value decreases while the landlord’s freehold interest increases. A lease extension can boost your property’s value and saleability.
High Ground Rents
If your lease says your ground rent can rise, your landlord can. If your ground rent is fixed, your landlord cannot raise it without your consent.
How Often Does Rent Rise?
Your lease will state any ground rent increases.
Lease Renewal Process
Seller Lease Extension
Most lessees who have owned their property for at least two years can extend their lease by 90 years and reduce ground rent to a peppercorn.
Other than these two changes, the new lease will have the same terms as the old lease, except in rare cases. The long lease and no ground rent attract buyers and lenders.
The seller can start the process (if they’ve owned the property for two years) and assign the claim to a buyer, even if the buyer hasn’t owned the property for two years.
Buyer-Extend Lease
A new buyer can extend a property’s lease after closing to avoid delaying the sale. The landlord can withdraw from the transaction, and a buyer won’t have the statutory route as a backup because they won’t have owned the flat for two years.
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