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There are millions of leasehold flats across the UK, and these are homes where you’ll be the owner for a set period of years whilst paying the freeholder an annual ground rent. Keep reading this guide to learn about the various steps involved with trying to sell a leasehold flat, as well as tips on how to boost your potential for getting a fast and competitive offer from a buyer.
- What type of property is a leasehold flat?
- Potential barriers to selling your leasehold flat
- Extending your lease before selling your flat
- Making a leasehold flat appealing to buyers
- Fixing problems with your leasehold flat before selling
- Four methods for selling your leasehold flat
- Frequently asked questions about selling a leasehold flat
What type of property is a leasehold flat?
Throughout the UK you’ll find a wide variety of houses, flats and other residential properties. It’s estimate that there are roughly 23 million dwellings in total, and 29 percent of those homes are flats or bungalows, according to Wikipedia. Those flats are then further divided between leasehold and freehold, with the former being far more common.
With a leasehold flat, you are the owner for a certain number of years, and this period will be specified in a lease agreement that you sign with the freeholder. This agreement will also set out the terms of the ownership, including how much ground rent you’ll pay every year.
This differs from a freehold flat in that a freeholder in this case would own not only the flat but also the building in which it is situated and the land on which the building was constructed outright.
Leasehold flats can be single units above shops in busy city centres, one of several such units within a block of flats, individual flats in a suburb or the countryside, and more.
Whichever type of leasehold flat you own, this guide explains the reasons why some buyers could be reluctant to make an offer on your property. It also provides information on ways that you might be able to make your home more enticing to potential buyers, as well as giving advice on the steps that you can take to increase the chances of receiving a quick and fair offer.
Potential barriers to selling your leasehold flat
When you are attempting to sell a leasehold flat, you could hear from buyers that they have one or more concerns about owning this type of property. Below you’ll see some of the top justifications for why someone might lose interest in making an offer on your home.
Short lease: Leasehold flats that have 90 or more years left on the agreement are usually seen as ideal by buyers, because it provides long-term certainty about their future ownership of the home. If your lease has 80 or fewer years remaining, it will be considered a short lease and this can be seen as much less favourable by prospective buyers. Mortgage lenders could also be reluctant to approve a loan for a buyer to purchase a flat that has a short lease remaining.
Property restrictions: Lease agreements can sometimes include provisions that impose strict limits on what the leaseholder can do with their flat, for example requiring the freeholder to approve any alterations to the property, as Ideal Home notes. These restrictions can be discouraging for some buyers who would prefer more flexibility as the flat’s next owner.
High costs: Another key part of lease agreements is the fees that the leaseholder must pay, which typically include the annual ground rent that you pay the freeholder, as well as service charges that help to fund the upkeep of the overall building. At some properties, these charges can be very expensive, costing the leaseholder a lot of money every year. High fees could be a dealbreaker for those potential buyers that have a limited budget for their next property.
Extending your lease before selling your flat
If you find out that you have only a short time remaining on your lease, you could have concerns that this will make it harder to get buyers interested in your flat.
As a result, one option that you might want to consider pursuing is extending the lease before you attempt to sell. Whilst this step is not mandatory, a longer lease can be a more attractive option to many potential buyers, and increase the number of people that may want to make an offer.
If you have owned the flat for more than two years, you have the right to give your freeholder what’s known as a Section 42 notice to grant you a 90-year extension on your lease.
Anyone who has owner their leasehold flat for less than two years could still try to get an extension on the length of the lease by trying to ask the freeholder to negotiate this with you.
Just beware that either approach to seeking a lease extension will likely require that you might need to get a legal expert or other professional involved with guiding you through all the steps. This can end up costing a large amount of money and also take a very long time.
If the process of extending your lease will take more time, money and effort than you can accept, or it’s simply not something that you want to do, you still have options for selling.
One such approach would be contacting LDN Properties or another quick home buying company that has plenty of experience with making fast and fair offers to purchase leasehold flats with short leases. It’s a streamlined and stress-free way to sell your flat within a few short weeks, with the additional benefit that you won’t have to pay them any commission.
Making a leasehold flat appealing to buyers
Preparing your leasehold flat for sale can also include low-cost or no-cost steps that you could take that may assist with increasing the interest that you get in the home from buyers.
Known as staging your home, getting it presentable for prospective buyers is an important part of the selling process, as Kubie Gold Associates notes. Simple tasks to get the interior and exterior of your flat looking clean and well-maintained can help to make getting an offer more likely.
Your options for improving the outside appearance of the flat will probably be limited by the freeholder, but you might be able to do some tasks like giving your window ledges a fresh coat of paint or replacing any broken windows, as this can make you flat look well-kept.
Inside the home you have more flexibility with getting it to look clean and tidy, because you can remove clutter from every room, vacuum and make sure the property looks as spacious as possible, because this can help with making your flat seem more valuable to buyers. If you have any pets, you should clean up after them and keep them locked away if any prospective buyers come to your home on viewings where they get to tour the inside of the flat.
Fixing problems with your leasehold flat before selling
Another issue to think about before attempting to find a buyer for your leasehold flat is whether you should attempt to resolve any structural flaws or other problems first.
There are many factors that can cause buyers to view a flat less favourably, and these can include physical problems like high levels of asbestos or widespread damp, or regulatory issues like the lack of a gas safety certificate or a poor Energy Performance Certificate rating.
If you have any such issues at your flat, selling it might be more challenging because these elements could make some buyers lose interest altogether. And other buyers might significantly reduce the price that they offer for your flat by the cost they expect to pay to fix the issues as the next owner. This is turn would mean a reduced profit for you from the sale, which is not an ideal outcome.
Spending funds, effort and time on resolving these problems before selling could help with removing it as a concern for buyers, hopefully making a sale easier to achieve. But many flat owners won’t have the time, money or interest in doing this kind of work before selling.
Rest assured that you should still be able to sell your flat even if it I has a structural flaw or other negative issue. For example, you could get in touch with a quick home buying company like LDN Properties, as they’re known for making rapid and competitive offers to purchase all types of flats, regardless of whether they have some type of ongoing large-scale problem.
Four methods for selling your leasehold flat
Typically, you can select from selling your flat at a property auction, selling without any assistance, selling with an estate agent or selling to a quick property buyer. There are disadvantages and advantages with each method, depending on your specific situation.
For example, if you’re looking for a swift sale of your flat, the best choice could be contacting a quick home buyer like LDN Properties because the timeline should only be a handful of weeks. But if you choose to sell your home with the services of either an auctioneer or an estate agent, then you will need to pay them commission, which will add to your overall expenses.
A useful tip is to note down your main goals with the sale of your flat, which includes whether you can afford to pay any fees, your preferred sale price and how long you can wait to sell. Then contrast these factors against the specific information about each of the four selling options below, and this should help with identifying the method that is the closest match to your needs.
Selling at an auction
Auctions are unpredictable because your home might not receive any bids, which means that it does not sell. This will extend the selling timeline because you will then have to go through the process of starting over with looking for a buyer, delaying it by many weeks or longer.
Or you may get a single bid at the reserve price, which is the lowest price at which you agree that your home can sell at the auction. Such a bid is a binding legal agreement to sell your flat and the buyer could sue you to enforce, if you try to walk away from the sale. For that reason, you must choose a reserve price that should lead to a profit, after paying your fees.
The standard rate of commission that an auctioneer will charge is 2.5 percent of a property’s auction sale price, and this will cause your expenses to rise because the fee is taken out of the sale proceeds immediately. You could ask individual auctioneers if they are open to charging a lower fee, or making the winning bidder pay for some of your auction costs.
You’ll pay commission to cover the auctioneer’s effort with selling your home, which includes creating and marketing a listing that describes the flat and features pictures of it. The auctioneer will also host the auction and oversee the completion of a successful bid on your property.
This is not a quick way to sell your flat because there’s plenty of waiting involved. You’ll have a wait of many weeks or months between when you opt for selling your home this way and when the auction takes place. And if your home sells, the buyer typically has 28 days to sign their legal papers and complete the other tasks necessary to finalise the purchase of your flat.
Selling without any assistance
This approach puts the onus on you to handle all of the necessary steps with selling the flat, as the Strike website says. It starts with making and advertising a listing, scheduling viewings and taking people around the flat, hearing offers and hopefully taking a genuine offer through to the exchange of contracts.
For that reason, it can often be the most stressful of the four selling methods, and it’s only advised if you have managed to sell this type of flat in the past, or if you there’s a suitably experienced friend or family member that can help you for free with finding a buyer. If not, you might be waiting more than a full year before you get a genuine offer from someone.
Remember also that a buyer could make an offer but then change their mind and cancel it. They can do this without risking any penalties if contracts are not yet exchanged. And you’d have to begin again with looking for offers, extending the total selling timeline much further.
The only obvious advantage with this approach is that you won’t need to pay any commission to an auctioneer or an estate agent, which reduces your costs. But this saving might be cancelled out by the money you’ll spend on advertising your listing and your other selling tasks.
A stress-way alternative to this method that still ensures you’ll avoid paying commission is to contact LDN Properties or another honest no-fee quick home buyer. They will not only purchase your flat without charging you any fees, but you’ll also get a much speedier selling timeline because they can exchange contracts and pay you the full proceeds in just a few weeks.
Selling with an estate agent
Selling using the support of an estate agent can reduce your workload because they will handle most of the tasks needed to find a buyer, from the original production and advertising of a listing through to scheduling viewings and hearing offers, ideally taking one to exchange of contracts.
This can often be a slow way to sell almost any type of property, including leasehold flats, and you should be prepared to wait many weeks, months or even more than an entire year to sell. Note also that someone can make an offer but withdraw it and collapse the sale, and if contracts have not yet been exchanged then they will not face any penalties for doing this. It will also extend your selling schedule because you’ll have to start over with seeking a buyer.
If you are looking to keep your expenses low when selling, you may want to look at other approaches because estate agents will require that you pay them commission if they are able to successfully sell your flat. On average, estate agents set this fee within a range of 1.15 percent to 1.40 percent of your home’s sale price, and it’s taken out of the proceeds right away.
Note also that some estate agents use a trick of quoting an attractively high price for selling your flat, even if they secretly understand it will only get offers at a much lower value. They do this to convince you to use their services, so they can profit from fees they’ll charge if they find a buyer.
You can easily avoid falling for this trick with a few simple steps, starting with asking numerous estate agents to give you free quotes for the price at which they think your flat could sell. Next, you can look on property sales websites like Rightmove or Zoopla to see the current and past sale prices of flats like yours. Finally, calculate the average of all these amounts and this should generate a much more reliable rough estimate of your flat’s potential selling price.
Selling to a quick property buyer
Often the fastest way to sell a leasehold flat is by reaching out to a quick buyer – these are companies like LDN Properties that have the money available upfront to purchase your home, without having to wait for several weeks or months to first get a mortgage to buy the flat.
As a result, typically a quick buyer can complete the process of buying your home, exchanging contracts and paying you the entire proceeds within a handful of weeks.
Another perk of selling using this method is that you will not need to pay any commission, if you use a true no-fee quick buyer, which will help to reduce your overall selling expenses,
If your flat has any type of structural flaw or other negative aspect, a quick buyer can also be a great choice because they are renowned for making competitive and fast offers to buy most categories of homes no matter their age, condition, location, shape, size or type.
For example, LDN Properties has purchased and made offers for many leasehold flats since launching in 2003, as well as homes with structural issues, flats with cladding, tenanted properties, listed houses, properties that are situated near to power lines, British Iron and Steel Federation houses, flats above commercial premises, homes that have rot problems, properties with mortgage arrears, Laing Easiform houses, maisonettes, penthouse flats, uninhabitable homes, properties that do not have a Fenestration Self-Assessment Scheme certificate, flats owned by smokers and many other scenarios.
Frequently asked questions about selling a leasehold flat
For more than 15 years, LDN Properties has bought leasehold flats across the UK, and below you can find our answers to some of the top queries we get from people trying to sell these homes.
Your top questions when selling a leasehold flat
A leasehold flat is one where you are the owner of the property for a certain number of years, and this duration will be specific in a lease agreement that you sign with the freeholder of the building in which the flat is located. You’ll also pay the freeholder an annual ground rent, along with paying service charges that help to fund the overall upkeep of the building.
When you are trying to find a buyer for your flat, you could find that its leasehold status creates some extra barriers to selling. Concerns that people might have about your property include potential restrictions in the lease agreement on how the flat can be used, and above-average service charges and ground rent that might be too expensive for many prospective buyers.
If your lease agreement has 80 years or less left on it, then it will usually be considered to have a short lease and this is seen as less desirable to buyers. The goal is to have a lease with 90-plus years remaining, and you’ll need to think about whether you’re willing to invest in the often costly and length process required to secure a lease extension from the freeholder.
There are a few simple and relatively cheap, or no cost, actions that can help to get buyers more interested in your flat. Inside the home you should remove as much clutter as possible and tidy every room, because this will make the property look larger and more valuable. Outside the flat you can see if there are improvement to make like repainting your window ledges.
If your flat has a large-scale problem, which can include physical flaws like extensive dry rot, then you may be thinking about whether to fix this issue before selling, in order to remove it as a potential concern for buyers. But there is no requirement to pursue such work before selling, and there are many owners who won’t be able to spend time, money or energy on it.
If you decide to sell your flat through an auctioneer, an estate agent or on your own then it could take several months at least before you are able to secure a buyer. But if you opt for selling your home to a quick buyer such as LDN Properties then the timeline should only be a few short weeks, and this includes exchanging contracts and paying you the full sale proceeds.
You will not need to pay any fees if you decide to sell your flat either without any help or if you sell it to a legitimate no-commission quick buyer like LDN Properties. But if you choose to sell the property using the services of an estate agent or an auctioneer then you will need to pay them fees, which will add to your costs because this will be taken out of the sale proceeds.
