short lease

Selling a flat with a short lease, my options?

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Tips on flats with short leases?

Lease extension and guidance for leaseholders selling a flat with a short lease from Sell House Fast 4 Cash.

Almost nearly all apartments and flats in England & Wales are Leasehold flats. Flats & apartments are generally not freehold and are sold on a leasehold basis; however, they can share part of the freehold property title with other flat owners.  

The unexpired lease term has put off potential buyers if you want to sell your property. However, an estate agent has informed you that your short lease will be a problem and is something you need to consider.

The sooner you get expert advice on your options from a specialist lease extension solicitor, the better.

Can you sell a flat with a short lease?

You can seek advice from Landlord Advice UK, which help leaseholders in England & Wales sell their short-lease property without unnecessary delay and with minimal stress. 

However, you have several options available, and you can get expert advice and guidance from a specialist lease property extension company like Landlord Advice UK.

Fast House Fast 4 Cash can value your property free of charge and guide you on what impact the short lease will have on your valuation. We can advise what you will be able to sell your flat for with a short lease.

Sell House Fast 4 Cash can also indicate how difficult your apartment will be to sell given the shorter lease and the availability of other comparable properties in the locality which may have longer leases and be more attractive to buyers.

You can speak to Landlord Advice UK, the lease extension specialist and discuss your options with them. 

Discuss your concern, answer any questions you may have about selling your short lease flat

What is a short lease on a flat?

80 – 89 years remaining will make it difficult to sell

 Many estate agents will inform you that attempting to sell a flat with a lease of 90 years or less is not easy. This is due to buyers who know that a lease with less than 90 years remaining may be something to be considered carefully. 

Even if a potential buyer is unaware that the short lease can be an issue, when their residential conveyancing lawyer checks the lease term and reports back to the buyer, the lawyer is duty bound to report the risks associated with the shorter lease. Therefore, the potential buyer will need to extend the lease shortly.

83 – 85 years remaining will cause mortgage problems for buyers

Mortgage companies will require from the prospective buyer security against the money loaned, which is a charge against the property you are buying.

Selling a flat with a shorter lease becomes even more difficult when the remaining lease term is less than 85 years.

This is due to many mortgage lenders unwilling to lend on leasehold properties with a lease of 85 years remaining or less.

A shorter lease means that many potential buyers would not be able to get a mortgage on the property, leading to a significantly smaller pool of potential buyers. 

However, you may be limited to cash buyers, investors, or the service Sell House Fast 4 Cash provide. These buyers may also be more likely to drive a hard bargain in terms of the sale price, using the short lease as one of the reasons.

80 – 82 years unexpired Lease

 The closer the unexpired lease term gets to 80 years remaining, the more complex the flat will become to sell. This is particularly the case where only 80 – 82 years are remaining, or there would be less than 82 years at the point your sale process would complete. 

This is due to the buyer not having the statutory right to extend the lease until they had been the registered legal owner for two years. By this time, the lease would have been reduced to less than 80 years. 

However, extending the lease becomes significantly more expensive when the remaining lease term falls below 80 years. Therefore, their conveyancing solicitor will make your buyer aware of this.

So, if the lease on a flat is less than 82 years remaining at the point, it is likely to be challenging to sell.

Potential buyers are expected to negotiate hard to reduce the purchase price, knowing they will need to wait two years before extending.

By this time, the cost of extending the lease will be much higher.

Lease 79 years or less remaining

 Buyers should be concerned if the short lease on an apartment has 79 unexpired years or less.

Or a potential buyer will use this fact to negotiate the purchase price. 

This is because extending a lease becomes significantly more expensive once the remaining term falls below 80 years. Therefore, your buyer will be aware of this by their conveyancing lawyer if they are not aware. 

Therefore, it is strongly recommended that leaseholders extend their lease before the remaining lease term decreases to less than 80 years, whether they intend to sell the flat or not.

Sell a flat with a lease to Sell House Fast 4 Cash

 Selling your short-lease apartment without addressing the short lease means you will have to sell the apartment for less than it would be worth with a new long lease. 

This is because fewer potential buyers will be interested in buying it due to risk, uncertainty, and mortgage term issues or because you are limited to selling to cash buyers and investors. 

So, for example, an estate agent can tell you what impact the short lease will have on the property’s sale price if it is not dealt with before or as part of selling.

Sell House Fast 4 Cash are experts in buying short lease properties, and they can do so quickly and quickly as the seller requires. This includes probate properties with short leases.

Extend your lease ‘informally’ and sell

 This option is often the most beneficial to leaseholders selling with a short lease because albeit it can take several months to extend the lease.

Although not the quickest solution, it will eventually allow you to sell your flat through an estate agent with a longer lease. 

This is possible because your lease can be extended via the informal (non-statutory route) process before completing your sale. 

Your sale contract will be conditional on extending the lease before the sale’s completion, so your potential buyer will only purchase the property once it has a long lease.

If the freeholder is a local authority or housing association, extending the lease through the informal (non-statutory) process is not an option.

Due to the fact the leased flat is sold with a longer lease, the buyer cannot negotiate a discount on the sale price due to a short lease. Therefore, you can sell your flat at its market value as advised by your estate agent.

Extending a lease via the informal (non-statutory) process can take 3-12 months from beginning to end, depending on how proactive and reasonable your freeholder or management company is.

However, the informal lease extension process may occur whilst the conveyancing process is undertaken. 

This is because the lease extension and the sale can be dealt with simultaneously; therefore, the lease extension does not need to delay your sale.

Obtain advice from Landlord Advice UK

 Early advice must be sought from a specialist lease extension expert if this option is to be considered due to the negotiation process with your freeholder. 

It would help if you did not inform your freeholder that you intend to sell your property, as this may weaken your negotiating position. However, a freeholder may believe your options are limited because you will be on a tighter timescale.

Your lawyer needs to contact the freeholder 

 It is recommended that your initial approach should be to your freeholder. In addition, you should request an informal offer by a lease extension solicitor on your instructions. 

This is because freeholders may take advantage of the fact that they regularly deal with lease extensions and are well informed, often with experts advising them regularly on such matters. 

This compares to leaseholders who are not experienced or well-informed regarding lease extensions and may not be getting legal representation from a lease extension specialist. 

This is because the legislation surrounding lease extensions is complex and is a specialist area of law.

Suppose a solicitor makes your approach to your freeholder requesting an informal offer on your behalf. In that case, your freeholder will know that you are receiving advice and might be deterred from making an unreasonable offer.

Freeholders are happy for a leaseholder to extend their lease term informally due to the fact the freeholder can maintain or increase the ground rent provisions.

They can also extend the lease by a shorter length than if it is extended via the formal (statutory) process. 

Both of these factors maintain the long-term value of the freehold, which is often the primary concern of freehold owners.

A freeholder will be aware that if a solicitor is advising you and they make a limited informal offer, you are likely to be informed by your solicitor to proceed via the statutory process. This is likely to be against the freeholder’s wishes, so they will likely seek to avoid this.

Carefully consider the ground rent and other lease clauses

 Where extending a lease through the informal (non-statutory process) to make the property more saleable, ground rent and ground rent review clauses proposed in the new lease must be carefully considered. 

A lease extension expert can advise on whether the ground rent and ground rent review clauses proposed by your freeholder are onerous. If they are, this will impact the saleability of your property in the same way as your short lease.

I cannot afford to pay the premium payable to extend the lease

 When a leaseholder has a flat with a short lease and wishes to sell but cannot afford to pay the premium or legal process costs associated with extending the lease.

It can be organised so that the purchase deposit monies from your buyer fund the lease extension premium paid to the freeholder. 

Therefore, a lack of finances does not necessarily stifle a sale to a potential buyer. This may be possible where a buyer has already been found.

Provided their cash deposit is sufficient to fund the premium and any deposit you may need to pay about an onward purchase if you are selling and buying.

Extend your lease ‘formally’ when selling

 This means extending the lease before selling under the Leasehold Reform, Housing and Urban Development Act 1993. The flat owner who has owned their flat for two years has the right to serve a notice on their landlord (known as a Section 42 Notice) to extend their lease. 

Under this procedure, a lease can be extended by 90 years. Upon completion of a new lease, the ground rent is reduced to a peppercorn (nil). However, completing the statutory process can take 8-12 months and would likely delay your sale.

Timeframes stipulate the entire process, and they must be all adhered to. This is one of the reasons you require a specialist lease extension solicitor to advise you properly. Missing the deadline can bring the process to an end and delay you from being able to commence the process again.

Due to the longer timeframes involved in a statutory lease extension. This legal option is only employed where the freeholder fails to accept informal (non-statutory) lease extensions.

However, where the informal offer made by the freeholder is faulty and where a potential buyer cannot be found to accept the benefit of the assignment of the Notice.

Selling with the benefit of assignment of the Notice

 This option requires an estate agent who can sell the property and explain the advantage of the lease extension claim notice assignment to a buyer to give them the confidence to proceed with the purchase.

This legal route involves initiating the statutory process by assigning the benefit and liabilities of the Section 42 Notice to a potential buyer as a condition of sale. This provides for completing the deal sooner than would be possible if the lease extension had to be completed first. 

Ordinarily, a potential buyer would negotiate the purchase price down by the value of the premium proposed in the Section 42 Notice or a purchase figure around that number.

The benefit to the potential buyer is that they do not need to wait two years before extending the original lease.

Your lease extension solicitor must advise on the Sale Contract as this is required to provide for the assignment and protect your interests by ensuring you are not liable for costs due from the Claim Notice and commencement of the statutory process.

With this option, due to the fact you will not be completing the lease extension, you are not required to pay the premium to the freeholder. The buyer pays this when they complete the process (following their purchasing of the flat).

This option has some complexities, including the uncertainty surrounding the eventual premium paid by the buyers to the freeholder and associated costs. Therefore, the premium proposed in the Section 42 Notice served is not the final amount the buyer will pay. 

In the event you extend and complete the extension, you are marketing the property whilst doing so. Or you commence a formal extension and assign the benefit to a buyer.

Having your lease extension solicitor and your conveyancing lawyer at the same company would be beneficial, as they would need to work closely together to protect your interests. 

It also makes communication easier and reduces the risk of a transaction falling through as your buyer. In addition, their conveyancing lawyer will receive complete responses to questions and enquiries raised, which cover both conveyancing and the lease extension.

Assisting leaseholders in England & Wales

Landlord Advice UK specialises in lease extensions and short leases and can advise on the formal lease extension process and legal costs.

Landlord Advice UK advises leaseholders in England & Wales, helping them sell their short lease flats.

You can deal with your lease extension through email and the telephone.

Documentation will be exchanged through email, and original documents relating to the property will be downloaded by your lease extension solicitor or licensed conveyancer from the Land Registry. 

The documents requiring a signature are for the new lease where the lease is being extended as part of the sale and the Deed of Transfer. These would be sent to you by Royal Mail.

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