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If you live in a leasehold flat and there are fewer than 80 years left on the lease agreement, you are considered to have a flat with a short lease. These properties can be harder to sell because mortgage lenders look unfavourably on them compared to homes that have longer leases.
- What is a short lease flat?
- What qualifies as a short lease flat?
- Why a short lease can make it harder to sell your home
- Extending the duration of your short lease
- Attempting to buy the freehold of your flat
- Methods for selling a flat with a short lease
- Frequently asked questions about selling a flat with a short lease
What is a short lease flat?
Leasehold flats, and less commonly leasehold houses, are properties that the person living there owns, but the land on which the building is situated and any shared common areas of that building are owned by a freeholder. For example, if you own a home in a block of flats then you are the leaseholder of your individual unit, but the land and communal parts of the tower back belong to the freeholder.
If you’re a leaseholder, you will typically pay the freeholder a service charge along with a ground rent, and these are both usually charged on a yearly basis. Those funds in turn are then used by the freeholder to pay for upkeep of the communal areas, such as any shared green spaces, and maintenance of the building.
You do not have a permanent right to live in your flat if it is a leasehold property, and instead the amount of time that you can stay there will be specified on your lease. Similarly, your duty to pay the service charge and ground rent ends at the same time that your lease expires.
Most leases are set for very long periods, typically beyond an average person’s lifespan, for example 99 years, although some leases can last up to 999 years or longer, and others might have much shorter timelines such as 40 years or possibly less in certain situations.
What qualifies as a short lease flat?
There is no UK government regulation or law that explicitly states how long a lease must be for a flat for it be considered short, although buyers are generally urged to be cautious when a lease has less than 80 years remaining as they are considered short lease properties.
Therefore, if you own a leasehold flat and there are less than 80 years remaining on your lease, your home likely qualifies as a short lease flat. As you’ll see from later sections of this guide, such properties can be harder to sell compared to homes with longer leases remaining. One reason is that the cost of extending the lease can rise significantly below 80 years.
To find out whether your home might be a short lease flat, you will first have to determine definitively if the property is leasehold or freehold. To do this, visit the UK government’s land and property information database and enter your postcode, which will bring up all of the homes within that postcode. Click on your individual home and you’ll then be able to see whether your flat is leasehold or freehold.
If your home is a leasehold flat, you’ll next want to get a copy of your property’s title register, which will detail the specific requirements of the lease, which will assist you in determining exactly how much time is left on the lease. You can quickly get a title register copy via the UK government’s Land Registry website by entering your home address.
Why a short lease can make it harder to sell your home
Having a short lease of less than 80 years can make it harder to sell a home, according to the Leasehold Advisory Service, an independent entity providing advice on residential leasehold law and park homes law. That’s because mortgage lenders might be unwilling to provide a loan for buying a short lease flat.
Lenders are wary of short lease properties because the shorter the lease, the less valuable the flat will be in their opinion. As every year ends, the overall value of your flat will drop with it. In the event that a buyer defaults on their mortgage, lenders will want the assurance that they can sell the flat and recoup the missed payments. They might not believe that this is possible with a short lease flat, which can result in the company turning down a mortgage application.
If you sell your home through an estate agent or an auctioneer, the buyer might need to first obtain a mortgage before they can complete the purchase. This can be a months-long process, which slows down the sale. And if the buyer is unsuccessful with their attempt to get a mortgage, the sale could fall apart and you’ll have to start all over with selling.
At the same time, the cost of potentially extending the duration of your lease will increase year after year, getting more expensive the closer that you near the end of the lease.
Extending the duration of your short lease
If you have been the leaseholder of a flat for at least two years, by law you typically have the right to secure an extension to your lease, which can be ideal if you only have a short lease left. This could potentially make your home more attractive to buyers, so might be a wise move in the event that you are trying to sell a flat that has below 80 years left on the lease.
But you should move quickly to extend a lease if that’s what you want to do, because every year that the lease gets closer to its end, the more the cost of extending it increases dramatically.
Anyone who has owned a leasehold property for more than two years usually has an automatic right to seek an extension of 90 years for an existing lease. And this right applies even if you are currently living in another home but have owned the flat for at least 24 months.
Extending your lease can be an expensive and lengthy process, which is not ideal if you do not have the funds or time available for it. For those homeowners who need to sell as quickly as feasible, it might simply not be realistic for them to invest in extending the lease. If that’s the case, you should consider contacting a fast buyer like LDN Properties who can swiftly buy your short lease flat.
To obtain an extension using the formal approach, you would contact your freeholder and serve what’s known as a “Section 42” notice, which is the formal notification that you want more time added to your lease. You should enlist the help of a legal professional who can then oversee the rest of the complicated steps.
Note that if you have been living in your flat for less than two years, you might still be able to get an extension on the lease before selling, according to the HomeOwners Alliance, an independent organisation that represents the rights of property owners in the UK.
One way to do this is to contact your freeholder and ask whether they would be willing to make a non-statutory pact on extending the lease, although they have the right to say no.
Another option is to try continuing the process of requesting a lease extension if it was started by your flat’s previous owner, although there would need to be some legal documentation proving that the power to continue that process passed on to you when you bought the flat.
Attempting to buy the freehold of your flat
Another option for improving the odds of selling your flat with a short lease would be attempting to buy the freehold of the building in which your unit is located. Leaseholders are allowed to team up with other people in the same building who own flats and exercise a “joint right” to buy the freehold.
But there are many complications involved, including the fact that you would have to get at least half of your fellow building flat owners involved. If your attempt succeeded, you would then all own the freehold property, for example by launching your own limited company to oversee it. You would all also be in control of new, lengthy leases for the units in the building.
To be eligible for this process, the building must have at least two separate flats, and only 25 percent or less of the freehold property can be in use for any non-residential reasons such as office space or shops. Two thirds of the building’s flats must also be owned by people who have lengthy leases remaining, and half of the flats must agree to buying the freehold. Be sure to obtain professional advice if considering this route.
Buying the freehold can be a great way to add value to a short lease flat, but it is an expensive option and it will consume a lot of your free time over many months. And you might encounter strong resistance from the freeholder, especially if you have a bad relationship with them. All of these factors can make buying the freehold too expensive, time-consuming and stressful for most buyers, and they should instead focus on how to best sell their short lease flat.
Methods for selling a flat with a short lease
When you have decided that you want to sell your short lease flat (even a penthouse flat), the next step is deciding on your ideal method for finding a buyer. The four typical choices that you’ll have are using an estate agent, using a property auctioneer, attempting to sell your flat on your own, or using a fast buyer like LDN Properties. You’ll find that all of the options have their unique advantages, but some of the methods also have disadvantages depending on your individual situation.
You should draft a realistic budget about the time and money that you can spend with selling your flat with a short lease, because this will help you to identify the method of selling that best suits your particular needs and can still hopefully secure a speedy and profitable sale.
Using an estate agent to sell your flat with a short lease
The first method for selling is contacting an estate agent for a valuation who will handle almost all the steps of the sale, reducing your workload and hopefully lowering your stress with selling.
The estate agent will craft a listing that promotes your home with text descriptions of its square footage and other main features, and includes photographs of the rooms designed to make them look their most appealing. The estate agent will advertise this listing in local newspapers, online and in their office, and schedule viewings for potential buyers to tour your home.
Some homeowners have said that they believe viewings invade their privacy and take up a lot of their free time. And you will also have to pay the estate agent their fees based on your flat’s final sale price in the event that it sells, which will have to be deducted from the sale proceeds and will therefore reduce your overall net sale profit.
There are no promises about when your flat will sell when you use an estate agent, and although some homes sell within days in rare circumstances, it’s far more likely that you will have to wait several months or possibly even more than a full year before you get a serious offer. And remember that until contracts are exchanged on your flat, the buyer could walk away from the sale and you’ll have no ability to force them to follow through with their offer. This can be incredibly stressful when it happens, putting you back at the start of the selling process.
Also, some estate agents only know how to find buyers for specific types of properties, and they may have zero experience with selling a flat with a short lease. If that is the case, then the estate agent might not know how to attract buyers for your home, leaving it unsold.
Be warned that some estate agents might quote an unrealistically high price for selling your flat even if they secretly know that they’ll only be able to find a buyer for the home at a much lower value. The reason that they do this is because they want to entice you to sell your flat using their services, so that they can get their commission if the property sells. One way to avoid being misled is to get sale price quotes from many estate agents and then calculate the average of these quotes, whilst also looking at home sales websites for prices of flats similar to yours. This quick, free and easy step should give you a more realistic of your home’s potential sale price.
Using a property auctioneer to sell your flat with a short lease
The second method for selling your flat with a studio lease is to list it for an auction, where anyone interested in buying your home will place a bid on it. Your goal is to have several people eager to purchase your property, so that on the day of the auction they will keep trying to outbid each other by offering more and more money for your home, pushing the final sale price high. However, there is absolutely no guarantee that this will be the outcome of your auction.
It’s entirely possible that your home will not receive any bids, and that means it is considered unsold and you’ll effectively reset the process of trying to sell it. Or you might just get a single bid placed at the reserve price, which is the least amount of money at which you will agree to sell your home. If you get a bid at this price then the home sells, and the buyer can sue to enforce this outcome after the auction.
Auction fees are usually charged based on your flat’s final sale price, although some auctioneers might make you pay a higher amount, and others will charge less. You should ask specific auction houses whether they are willing to negotiate a lower rate for the sale.
Expect to wait at least several weeks between the day that you list your flat for sale and the day on which the auction occurs. If your home manages to sell on the day of the auction, the winning high bidder then typically has about 28 days to complete the legal paperwork and other required steps for finalising the sale, making the overall process last at least a few months.
There are two types of auction, the traditional method and the modern method. With the traditional method the auction takes place on one day where people place bids, whereas with the modern method your listing will be active and able to receive bids for a set amount of time, typically a month or more, and the winning bid is the highest when the listing ends. Ask companies whether they offer both methods, and if they do, choose the one you prefer.
Some auctioneers specialise in selling certain types of properties, and they might not have the knowledge for how to sell a flat with a short lease remaining. If that’s the case then they may not understand how to best market your home, and it will fail to get any interest from buyers. Get in touch with auction companies and ask them for their past sales records on homes like yours.
Attempting to sell your flat with a short lease on your own
The third method for selling your home is selling on your own, but it is not recommended unless you, or someone you know closely, has extensive experience with the property market. That’s because it will dominate your daily life, will be very stressful, and can have significant costs.
If you sell on your own then you will have the duty to develop a listing for your flat, decide how and where to advertise the listing, be responsible for scheduling and hosting viewings for prospective buyers, and overseeing any offers on your home through to completion. This is a lot of work for an experience estate agent, and can be overwhelming for novice seller.
You are already likely to face a reduced audience of interested buyers because of the flat’s short lease, creating a barrier to selling. There’s no reasons to make selling your home even harder, and that’s why it’s strongly advised that you consider other options.
Still, if you decide that you are adamant about selling on your own, there will be certain benefits including the fact that you will maximise your profit because you won’t over anyone any fees, except to your solicitor. But for many people the stress of selling alone far outweighs the profit.
Using a fast property buyer to sell your flat with a short lease
The fourth method for selling your flat with a short lease is likely the speediest, because when you use a fast home buyer such as LDN Properties you should be able to complete the entire process within weeks, and that includes receiving your proceeds and exchanging contracts.
The reason why quick buyers can move so rapidly is that they have the financial resources upfront to follow through with the purchase, without having to wait a number of months in order to obtain a mortgage to afford your flat, which will happen when selling via other methods.
Reputable quick buyers like LDN Properties also promise to never charge homeowners any fees when selling their leasehold or freehold flats or houses, which means that you can count on receiving the full proceeds from whatever final price the company is able to offer for your home. This makes using a speedy buyer the perfect choice if you need the best sale profit possible.
These companies are also usually able to make offers on the broadest range of homes, no matter their condition, shape, size, type or age. The long list of homes in London that LDN Properties has experience with buying after making fast and fair offers includes houses with solar panels, flats with cladding, homes where the owner cannot locate important documents such as the title deeds, houses that have septic tanks, flats with sitting tenants who have many years left on their rental agreements, properties where the invasive species Japanese knotweed is present in the garden, homes built from atypical construction such as concrete, and more.
And to give you extra peace of mind when selling your home, many fast buyers are registered with The Property Ombudsman (TPO), which is a third party entity that writes regulations which are designed to protect homeowners against fraud in the fast buying industry. All TPO members, such as LDN Properties, must comply with those policies. Be wary of any fast buyer that claims to be a member of TPO but cannot prove their registration status, or a business that refuses to join the organisation, because it increases the risk you’re dealing with a scammer.
You can check the membership credentials of any fast home buyer by visiting TPO’s website and then clicking on the tab labelled “Find a Member” on the main page, and then typing in the name of a specific company. If the quick buyer is actually a genuine member of the organisation then you will be able to see their full registration details and other information.
Top questions about selling a short lease flat
Homeowners thinking of selling their short lease flat quickly often have a range of questions, from the repair works required before selling through to how long it takes to sell. Here are some of the main questions we’re asked about selling a flat with a short lease:
If you own a leasehold flat that has less than 80 years left on the lease agreement then you are considered to have a home with a short lease. Leases give an owner the right to live in a flat for a set duration of time, anywhere from 99 to 999 years, in exchange for paying an annual service charge and ground rent to the freeholder who owns the land and property that the flat is part of.
The less amount of time left on a leasehold flat’s lease, the less valuable the property is considered to be for a few reasons. The cost of extending a lease rises dramatically every year as you get closer to the end of the lease. And mortgage lenders look less favourably on flats with short leases, making it difficult for a buyer to get the funds for purchasing your home.
Yes, and if you have owned the flat for at least two years then you typically have an automatic right to seek an extension from the leaseholder, which could help increase your home’s value prior to sale. It can take some time and money to go through the complicated process of a lease extension, so this might need be an option if you want to sell your flat in a hurry.
You might, depending on how you to decide to sell your home. Using an estate agent or a property auctioneer will come with fees that you’ll have to subtract from the sale proceeds before you can calculate your final profit. But you’ll never pay commission when using a fast home buyer like LDN Properties, which means you’ll get to keep all of the proceeds.
There’s no certainty about when your home will sell, but using an auctioneer will take a few months at minimum when you consider all the aspects of the sale, and some estate agents might take many months or even longer than a full year to sell your home. Fast buyers, by contrast, can typically complete all the steps of buying your property in just a few weeks.
You could, and as a leasehold flat owner you certainly have the right to, and freehold homes may be more attractive to buyers. However, this is a complex option with many conditions, such as having at least half of the flat owners in your building interested in it. For this and many other reasons it’s not usually considered to be a realistic option for homeowners.
First, you’ll need to visit the UK government’s land and property information website and search for your address, which will lead you to a page that lists details about your flat including whether it is a freehold or leasehold home. Next, you will have to obtain a copy of your property’s title register, which you’ll need in order to find out how many years are remaining on your lease.