Do you own a leasehold flat or house with 80 years or less to run on the lease? Then you could be facing some problems if you ever want to sell or remortgage.

Almost all flats are leasehold and there are a surprising amount of people who are oblivious to how long is left on their lease. But, this is a dangerous thing to ignore.

 

 

What is a lease?

Owning a leasehold property means you have been given permission to live in the property but you don’t own the building or the land around it. When you buy the property you are issued a lease - often around 99 or 125 years (although some leases can be 999 years). Once the lease runs out the property is transferred back to the owner (the freeholder). However, the lease can often be extended - at a cost.

Why will a short lease cause me problems?

If you let your lease run out completely you will find you have to hand ownership of the property back to the freeholder for free, unless they allow you to extend the lease. At this point the freeholder can pretty much name their price for a lease extension - which can prove to be incredibly expensive. However, you will not be homeless as you have the right to remain in the property as a tenant and pay rent.

You will also find that as a lease gets shorter and shorter the property value decreases. This is because a new owner may have to pay thousands to extend the lease after they have bought it.

Getting a mortgage or remortgaging can also prove more tricky. Most high street lenders steer clear of lending on properties with short leases. There are some specialist lenders who will lend for properties with short leases, but their interest rates are often higher.

How do I extend a lease?

If you want to extend the lease on your flat or house you will need to apply to the landlord for an extension. You can do this at any time. Extending leases can be expensive and complicated so it’s advised you work with a solicitor who has experience in extending leases. You can find out more information on leasehold properties here: https://www.gov.uk/leasehold-property/extending-changing-or-ending-a-lease

What if I want to sell and can’t afford to extend the lease?

If you want to sell the property but extending the lease isn’t an option then you could try selling through a high street or online estate agent and see if you can find a buyer who is willing to take on the risk and cost of a property with a short lease.

The other option would be to consider using a professional property buyer. These companies buy properties for cash and often buy properties will short leases.

Reader’s Digest Property has teamed up with professional property buying company House Buy Fast. They are experienced in buying properties with short leases. To find out how much you could get for your property call 0800 4337979 or contact us using the form below.

 

 

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