If you need to know how to sell a home with a short lease, we’ve got you covered. But, unfortunately, the process is fraught with complications and the potential for delay.
Mortgage providers are stringent on this issue. After all, they won’t be prepared to loan you a large amount of money to buy a house unless they know it’s going to be yours for a lifetime.
What is a short lease?
A leasehold home sits on land owned by someone else. The leasehold permits you to occupy the land for a predetermined period.
The owner of the land is known as the freeholder. And that person or organisation can decide who occupies the land — and for how long. But most leases are long-term, lasting anywhere between 90 and 1,000 years. Once the lease runs out, legal possession of the land returns to the freeholder unless an extension is agreed upon.
Find out the length of your lease.
Access the Land Registry website to obtain a full copy of your title deeds. This document will tell you whether you own a leasehold or freehold property. Again, it would help if you did this before you listed your house for sale.
If you have less than 80 years remaining on your lease, the value of your property could be significantly lower than the local average. And buyers will find getting a mortgage on the property very difficult indeed.
Extending your lease
If you can extend your lease, you can make your home a lot more attractive to potential buyers. However, it’s important to remember that property owners can’t apply for an extension until they’ve lived there for two years.
There are two ways to apply for a lease extension when selling a home:
An extension before a sale.
The buyer can make obtaining a lease extension a condition of sale. The owner then applies to the freeholder for the extension. But this process can take several months. And if a homeowner needs to sell a house fast, this may not be a viable option.
Seller serves a statutory notice.
To speed things along, the seller can serve the freeholder with a statutory notice requesting the extension and pass it to the new owner upon completion. However, most sellers would only do this after an exchange of contracts.
Selling a short lease home.
In most cases, the pool of buyers potentially interested in a short lease home is low. And this means the price can be adversely affected. Traditional estate agents will sell short lease homes, but they’ll highlight the lease issue on all their marketing materials, which will slow the process down and reduce your property’s price potential.
You also have the option of selling at an auction. Once the hammer falls, a sale at auction becomes legally binding, so there’s a lower chance of the buyer pulling out because of a short lease.
Avoid all the hassle of selling a short lease home by selling to a cash buyer and avoid marketing, property viewings, negotiations and collapsed property chains.