Not only has the global pandemic changed the way we work, shop and socialise, it has also got many of us thinking about how we live…or rather, how and where we want to live.
Forced to spend much more time at home than we perhaps normally would, lockdown has encouraged homeowners to reevaluate their living requirements, with many seeking more space and flexible living to accommodate changing work/commuting habits.
The problem for some, is that there has been a shift in demand, with flats becoming somewhat less desirable than houses. According to Zoopla, houses are currently selling 33% faster than flats.
Whilst there will always be a market for flats, those struggling most in the otherwise buoyant market are homeowners looking to sell a property with a short lease.
In the last month alone, WeBuyProperty has received five enquiries from potential vendors who thought they would be able to bag a buyer looking to take advantage of the Stamp Duty holiday, only to later realise the challenges presented by their short lease.
Owning a property on a leasehold basis means that you only have the right to occupy the property for a fixed number of years, which on many properties can be up to 999 years and therefore does not present a problem. However, once a lease has less than 80 years to run, the value of the property begins to fall.
The big problem is that banks and building societies will not usually lend money on houses, flats or apartments with a short lease. Some banks will not lend to a person buying a property with a lease under 70 years, which means unless the vendor can find a cash buyer, the property is impossible to sell.
In addition, whilst the value of a property with a short lease comes down as every year rolls on, the cost of solving the problem rises. That is why it is imperative that leaseholders find out how much time is left on their lease, particularly if they think they are nearing the risk zone of around 85 years.
There is nothing more frustrating than making the decision to move and then finding that external factors are preventing you from doing so. However, there are a number of options depending on how quickly you need/want to sell:
- Once you have a lived at the property for two years you can apply to extend the lease. Typical extensions are 90 years for a flat and 50 years for a house. However, extending a lease can be a costly exercise running into thousands of pounds depending on the value of the property and time left on the lease.
- You can also buy the freehold, but this can be challenging in a block of flats as it requires all neighbours to come to a joint agreement to do so, and again can be costly.
- WeBuyProperty will make cash offers to vendors who wish to sell properties with a short lease.
If you would like to some advice, or to find out how quickly you could sell your short-lease property, contact: