Selling your Short Lease Flat?
Selling your Short Lease Flat? Getting started
If you’ve decided to sell your short lease flat, we are happy to share useful information on how to get started and useful advice as well as further information on how our short lease property buying service can help you.
When your flat has less than 70 years remaining on the lease, it will be considered to be a short lease flat and this can make the home more difficult to sell than one with a longer lease. This guide explains some of the issues of selling a short lease flat, and also offers details on the various steps that you can take to help attract a fair and fast offer on your property.
- What does it mean to have a flat with a short lease?
- Reasons why flats with short leases can be harder to sell
- Buying the freehold before selling your home with a short lease
- Seeking a lease extension ahead of selling your flat
- Opting to sell your flat with a short lease as is
- Preparing your property for potential buyers
- Preparing for Capital Gains Tax on the sale of your home
- Deciding on which method to use for selling your short flat
- Top queries about selling a flat with a short lease
What does it mean to have a flat with a short lease?
Most of the flats in the UK are leasehold properties, which means that you own the unit for a specific amount of time – usually many years – set out in a leasehold agreement that you sign with the freeholder, who is the outright owner of the building and the land on which it was built.
Another term of a leasehold agreement is that you will pay the freeholder an annual ground rent, which can range from a small “peppercorn” amount up to many thousands of pounds.
Once the lease on your flat expires then the ownership simply reverts back to the freeholder, as the UK government’s website explains.
The vast majority of leasehold agreements last for 99 years, but there are some that allow for up to 125 years or even more. You own a flat with a short lease typically if there are less than 70 years left on the leasehold agreement as discussed in this LDN Properties guide.
Reasons why flats with short leases can be harder to sell
You should be able to find out how long you have left on your lease agreement by checking the text of this contract, because it should specify the duration of your leasehold ownership.
If you don’t have a copy of the agreement then you can get in touch with the estate agent that you used for buying the property, or contact the freeholder directly, and get this information.
There’s also the option of visiting the website of the HM Land Registry, which is in charge of handling property registrations in England and Wales, and paying a fee to look up your property and, if it is registered, paying to get a copy of this registration title that will include important information about the flat, including how much time is left on the leasehold agreement.
It’s important that you find out if your home has a short lease because this can make finding a buyer for the property more difficult, compared to a flat that has a long lease remaining.
One reason that some buyers might be wary to make an offer on your home is because they could only get to enjoy ownership for the short number of years left of the lease agreement, in a situation where they purchase the home but the freeholder has grounds to refuse a lease extension. As a result, certain potential buyers could see it not being worth their time to make an offer.
Another explanation for why flats with short leases can be harder to sell is that some mortgage providers might not be willing to give a private buyer a loan to cover the purchase.
There are a few reasons for mortgage providers might look less favourably on short lease flats, including that the length of the mortgage could end up extending past the amount of years that are left on the lease agreement. Another reason is that mortgage lenders may see homes with short leases as harder to resell if they need to, should the buyer default on their loan.
Make sure to read the comprehensive guide from Auction Link about selling property with a short lease.
Buying the freehold before selling your home with a short lease
One possible solution to having a short lease remaining on your flat would be to attempt to buy the freehold of the property.
Purchasing the freehold would mean owning the flat outright, which means you would no longer be bound to a lease agreement. And some buyers might possibly see a flat that also owns a share of the freehold as being more valuable than a leasehold home which has a very short lease remaining.
However, buying the freehold of a block of flats can be a slow and complicated process and it’s not one that you’ll be able to just do unilaterally without getting the other flat owners involved. You will end up having to buy a share of the freehold alongside whoever else might live in the building, and certain other conditions may apply that can make this option impossible.
Seeking a lease extension ahead of selling your flat
Instead of trying to buy the freehold on your flat, you could try contacting the freeholder and seeing if they are willing to negotiate a multi-year extension to the agreement.
Just beware that if you open the lease agreement to negotiation, the freeholder might try to take advantage of this by requiring a much higher annual ground rent. If that happens then you could still be making the sale of your home harder due to that increased ground rent the next owner would have to pay, even if you remove the problem of the lease no longer being short.
This process can also be very slow and also include several complications, as the HomeOwners Alliance notes. And if you’re looking to sell your home as fast as feasible, for example just a few weeks, then this will not be an option you can pursue.
Further, some freeholders might be unwilling to extend the lease agreement, which would immediately remove this step as being something that you would be able to consider.
If you have owned your flat for more than two years and satisfy other criteria, you may be able to serve a section 42 notice in order to extend your lease. Such an approach often requires professional advice, so be sure to speak with a qualified surveyor and lawyer.
Opting to sell your flat with a short lease as is
Another alternative step you can take is to try finding a buyer for your flat with a short lease “as is” without trying to make any changes to the duration of the lease. It’s still possible to get fair and fast offers for such homes, particularly if you get in touch with a quick home buying company like LDN Properties.
These companies will be able to make a competitive offer despite the property having a short lease remaining, so it can be a good solution if you can’t, or don’t want, to extend the lease.
Another way that you might have to sell your home “as is” is if it currently has any kind of structural problem, such as dry rot or high levels of radon. Whilst some sellers might have the time, effort and money available to invest in fixing this issues, many other owners won’t. If that’s your situation then you should consider selling to a quick buyer, because they will purchase homes regardless of factors such as the age, condition, location, shape or size of the flat.
Preparing your property for potential buyers
Making sure your home looks in ideal condition is very important for any buyers that might come to your property on a viewing to tour the inside and outside, as a recent article on Rightmove’s website explains. Buyers are likely to look on well-maintained homes as more valuable, but will typically see homes in poor condition as being worth less than you’re seeking.
For the exterior of your flat this means looking to see if there are small-scale issues that you can fix with minimal time, money and effort. This can include replacing any broken glass, giving the door and window ledges a new coat of paint, and fixing any missing roof tiles. And if you own any green space at your flat, you should mow this and remove any weeds before selling.
For the interior of your flat this means removing as much clutter as possible from rooms in order to make them appear as spacious as possible, and hopefully more valuable. Make sure each room has also been cleaned, and if you have any pets then you should clean up any hairs and also lock the pets away during any viewings when buyer are touring your property.
Preparing for Capital Gains Tax on the sale of your home
When someone who owns a property or other valuable asset, such as artwork or a car, sells it and makes a profit, they might have to pay Capital Gains Tax on that profit, or gain.
If you are required to pay Capital Gains Tax then it will typically be charged on this amount of profit, and not the overall sale prices, as Wikipedia explains.
Should you end up selling your short lease flat at a loss compared to the price that you first paid for it, then Capital Gains Tax may not apply. It can also be a good idea to ask a financial expert about any possible ways to eliminate or at least lower how much tax you owe as short lease flats particularly can be treated differently for taxation purposes.
Deciding on which method to use for selling your short lease flat
There are four typical methods available for selling your flat that has a short lease, and they are selling with an estate agent, selling to a quick buyer, selling at an auction, or selling on your own. You’ll find clear benefits with some methods, like not paying fees when using a quick buyer, and major cons with others, like it taking over a year to sell without any help.
In order to better identify which of the four selections is ideal for your unique selling wants and needs, first write down your top goals with selling, such as your goal sale price, how long you are prepared to wait to find a buyer, and whether you can accept paying any commission. Then compare it against the details below to help you find the closets match to your situation.
Selling with an estate agent
Selling to an estate agent doesn’t require much effort from you, because they will be responsible for every step involved with the process of selling your flat.
This starts with them creating a listing that features photographs of the interior and exterior of your home, along with a description of its main features. The estate agent will then advertise this listing online, in local newspapers and in their office, and then schedule viewings where they can take buyers on tours of the flat, and finally hearing any offers from serious buyers.
It’s not a very quick process when selling through an estate agent, and you should be prepared to wait more than entire year before receiving a genuine offer. And remember that potential buyers can withdraw an offer until just before exchanging contracts, and they won’t face any penalties. But this outcome can add many more months to your selling process, because once the offer is withdrawn you’ll have to begin again with trying to find a buyer.
Estate agents will also make you pay commission as a percentage of whatever sale price you’re able to get for the flat. This fee will add to your overall selling expenses because it will subtracted from the sale proceeds right away.
Some estate agents might also not have any experience with selling a flat that has a short lease. If that’s the case then they might find it difficult to know how to market your property, which could means failing to attract any buyers for many months. Always check with individual estate agents about whether they have managed to sell flats with short leases in the past, and avoid selling your flat using any company that does not have such experience.
Selling to a quick buyer
Quick buyers, like LDN Properties which was founded in 2003, are companies that have the financial ability to make upfront purchases of almost any type of freehold or leasehold home. They don’t have to wait weeks or months to get an approval for a mortgage from a lender that would give them the necessary funds in order to complete the purchase of your home.
This means the typical timeline for selling a home this way is usually just a few short weeks, and that includes the time it takes to pay you the proceeds and exchange contracts. For many properties, this is often by far the speediest method available for selling them.
These companies also make competitive and fast offers on properties no matter their age, condition, location, shape, size or any problems they might have.
For example, LDN Properties’ long list of homes purchased throughout the UK includes not just flats with short leases, but also properties at a junction, Laing-Easiform houses, flats that have low Energy Performance Certificate grades, bed and breakfast properties, homes situated in areas that are at higher risk from flooding, lock-up garages, infested houses, and other situations.
Yet another benefit of selling to a quick buyer is that the honest companies will never charge owners any commission for the sale, which can help with reducing your selling costs. But if you sell your flat through an auctioneer or quick buyer then you will have to pay the commission out of the sale proceeds, which will result in an increase to your total selling expenses.
Selling at auction
Another way to sell your flat is through an auction, where people will place bids on your property and the top price at the time the auction ends will be deemed the buyer of your home.
You’ll need to opt for a reserve price, which means the lowest price at which you agree to sell your flat. If someone places a bid at this value then that’s a binding legal agreement for selling the home, and the buyer can sue to enforce it if you try to walk away from the sale. That’s why it’s crucial to choose a reserve price that should hopefully produce some profit from the sale of your flat, even after you have subtracted the commission that the auctioneer will charge.
When you sell with an auctioneer, they will typically charge you commission for hosting the auction and your listing. This will increase your selling expenses because it’ll be taken out of the sale proceeds right away.
Selling your flat can also take a long time at an auction because of the delays involved. After your list the flat for sale, there’s usually a wait of many weeks or months before the auction occurs. And if the property does sell at the auction, the winning high bidder will then often have about 28 days to sign all of their documents and complete their other required tasks. For owners looking to sell more quickly, you will want to consider an alternative method for selling.
Some auctioneers may give the buyer more time to finish these tasks, whereas other companies may set shorter deadlines. You could always contact individual auctioneers to see if they might be willing to give the buyer less than 28 days to finish their mandatory steps.
Selling on your own
Selling without any assistance can be an incredibly stressful option, because the burden will be on you to handle every single step of the process of trying to find a buyer.
This includes developing and advertising the listing, organizing and leading viewings, and hearing offers from buyers, ideally leading one through to completion. You can expect this work to take up a lot of your time, and the overall process might take more than a year.
One advantage of selling this way is that you will not need to pay any commission to a third party like an auctioneer or estate agent, which helps to reduce your expenses.
But the trade-off for this lack of fees is having to wait a very long time to sell your flat. Instead, one alternative is selling to a quick buyer like LDN Properties, because the honest fast buyers will never charge any commission and can also purchase your flat within weeks. This would give you the same benefit of zero commission, but with the extra pro of a much faster sale.
Top queries about selling a flat with a short lease
✅ What does it mean when my flat has a short lease?
If you live in a leasehold flat, which is one where you own the unit for a set number of years and pay an annual ground rent to the freeholder who owns the building itself and its land, then you typically have a leasehold agreement. Generally, agreements with less than 70 years left are considered short, but some mortgage lenders say that their standard is 80 years or less remaining.
✅ What are my options when owning a flat with a short lease?
You could consider asking the freeholder of the property if they might be willing to negotiate an extension to the lease agreement so that it’s no longer short or indeed serve a section 42 notice. Or you could attempt to buy the freehold of the property, which would end the lease agreement. Alternatively, you can try to sell the flat as is without extending the lease, for example by selling to a quick buyer.
✅ How can I prepare my flat with a short lease for sale?
Start with a deep clean of all the rooms and then remove as much of any clutter as you possible can, because this will make the rooms appear to be larger and more valuable. Outside of the property you should fix any visible issues like broken glass or chipped paint, and make sure that you have mowed any lawn or other green space you have, and removed any weeds.
✅ Will I have to pay Capital Gains Tax on the sale of my short lease flat?
You might have to pay this, and if it applies then it will be typically be charged based on the profit, also known as the gain, that you make on the sale of your flat. Make sure you obtain professional advice particularly in the case of short lease flats.
✅ What’s the fastest option for selling my flat with a short lease?
You should contact LDN Properties or another quick buyer because they are able to complete the purchase of most leasehold and freehold homes within just a handful of weeks. That’s often much speedier than the alternative methods of using an estate agent, selling on your own, or selling via a property auction, because these approaches can all take at least many months.
✅ Which methods of selling my short lease flat will require that I pay a fee?
If you sell your flat through an auctioneer or estate agent then they will typically charge you commission based on whatever sale price you’re able to get for the home. Selling on your own or to a quick buyer are two zero-commission methods.
✅ How do I know that I can trust a quick buyer when selling my flat with a short lease?
You can ask individual quick buyers if they are registered with The Property Ombudsman (TPO), which writes rules that protect owners against fraud in the quick buying industry. All TPO members, like LDN Properties, are required to adhere to these regulations, which should give you extra peace of mind when deciding to sell your short-lease flat to one of these companies.