How to sell your property with a short lease

What is a property with a short lease?

If you’re living in a leasehold property, whether it’s a house or flat, then someone else owns the building outright and you reach a leasehold agreement with the owner, called a freeholder. The lease will specify the duration of years for which you have the legal right to live in the property in exchange for paying the freeholder an agreed-upon amount of regular ground rent.

Most lease agreements run for 99 years, but in some cases leases have extended up to 125 years or much more. A short lease is generally considered to be one in which the agreement has less than 70 years left. However, some mortgage lenders have recently said that they consider a short lease to be those with less than 80 years left.
Having a short lease is often considered to result in a negative effect on a property’s value, as the HomeOwners Alliance explains. For example, a flat that has just 70 years remaining on the leasehold agreement could be worth about 22 percent less than one with a lengthy lease.

But the exact impact of a short lease on your home’s value will be case-specific, as the potential sale price of the property will also be influenced by a number of other important factors such as the condition of your home, its location, whether there are any major problems, and more.

Potential problems with trying to sell a house or flat with a short lease

If you are interested in selling your property but your lease meets the definition of a short lease then you will face additional hurdles in finding a buyer for your house or flat. That’s because homes with short leases are seen as less desirable for potential purchasers. The Leasehold Advisory Service considers lease duration when you are looking to sell a short lease flat.

Most home purchases require securing a mortgage to help pay for the property, but banks and other mortgage lenders might be wary of loaning the money for a short lease home. It’s typical for lenders to want leases to run between 25 and 30 or more years than the full duration of the mortgage, and that’s why the shorter the remaining lease, the harder it is to sell the home.

When someone takes out a mortgage, they commit to repaying it through monthly instalments plus interest. If they fall behind on these payments then the lender can try to repossess the property and resell it, using the proceeds to recoup the outstanding amount of the debt.

But a lender might be wary about approving a mortgage for a short lease home because they could worry that it will be hard to find a buyer for the property should the owner default on the mortgage. And if a private buyer is relying on getting approved for a mortgage in order to purchase your property, this naturally means that they will not be able to buy it.

Still, you should not panic that you will never be able to find a buyer for your home just because someone is unable to get a mortgage for it. As explained later in this guide, you still have a number of strategies available for selling, such as getting in touch with a zero-commission quick home buyer like LDN Properties that has the funds available to buy your property immediately.

Suggested solutions for selling your home when it’s on a short lease

If you own a short lease home you shouldn’t be discouraged from attempting to sell the property. Whether you are looking to move because of upsizing or downsizing your property, or a change in job, or a financial need, it is possible to sell a short-term leasehold property.

One option for overcoming the hurdle of selling a short lease home is to contact the freeholder and reach an agreement on extending the duration of the lease. If they agree to this revision, it should mean the lease will then have many more years left to go and is no longer considered short term. As a result, buyers will likely be able to get a mortgage, so you can then sell the home. However, the process of negotiating a lease extension can cost thousands of pounds.

Another option is to contact the freeholder and see if they will sell the freehold to you. The UK government’s website has important details on how this process works. If the home is a flat then you will have to buy a share of the freehold, but if it’s an entire standalone house you have the right to make an offer to buy the freehold outright. But this option can be very expensive.

A third choice is to sell your short lease property to a quick home buying company that specialises in making swift cash purchases of houses and flats of all sizes and shapes. You can easily find many such companies online, and you can verify the trustworthy ones – they will be members of The Property Ombudsman that sets rules for the quick buying industry. There are several benefits of choosing this approach, including the fact you’ll never have to pay any fees for selling this way, and that you will be able to secure a very fast sale.

The next section of this guide offers more details on the simple process for selling your short lease property to a quick buyer, along with information about other ways to find a buyer.

Details about your options to find a buyer for your short lease home

As noted above, selling your short lease property to a quick buyer is one solution, but there are three other ways that you can potentially find a buyer – you can enlist the help of an estate agent, you could try your luck with a property auction, or you could sell without any assistance.

You will discover that there are prominent advantages and disadvantages associated with all of these methods based on their potential cost, time taken and more. By way of example, it might only take a handful of weeks to complete the sale of your home when you contact a quick buyer like LDN Properties, but it could take over a year to sell when you use an estate agent.

It may be helpful to write down your main aims when selling your property, including your goal sale price, whether or not you are open to paying commission on the sale, and how fast you need to find a buyer. Then compare these important factors against the specific details of all four selling choices below and this should assist with identifying the best match for your needs.

Selling to a quick home buyer

One option for selling your short lease property is to get in touch with a quick buyer – these are companies like LDN Properties that have the funds available to immediately purchase almost any home, so they don’t have to wait weeks or months to first get approved for a mortgage. This reduces the typical timeline when selling this way down to just a handful of weeks.

Selling to a quick buyer is also a good choice for a home as these businesses are known for making fair and competitive offers to purchase almost any freehold or leasehold home, no matter its age, condition, location, shape, size, or type. That includes properties that have issues other buyers would see as dealbreaking problems, like structural damage such as subsidence or damp, or legal disputes, for example a fight over ownership of the home.

LDN Properties, which launched more than 20 years ago, has for example purchased almost countless homes with a short lease, as well as properties with an improvement notice, flats without a license to alter, houses that have survey problems, homes with flooding damage, properties with a leaking roof, flats with structural issues, houses of multiple occupancy, listed homes, smoker’s properties, vandalised flats, properties situated near to power lines or mobile telephone masts, houses that have Japanese knotweed in the garden, and many other varied examples.

It’s also a no-hassle, stress-free and straightforward way to sell a property that starts when you contact the quick buyer about selling your home. Within an hour you should be given an offer on your home, and you’ll have at least a week to think about whether to accept it.

Should you agree to that tentative offer, the quick buyer will then visit your home so that they can assess the interior and exterior before they make a final offer. This is the only such viewing that you will have to agree to when selling this way, compared to possibly dozens or more viewings from strangers if you decide to sell via an estate agent or an auctioneer.

And then the quick buyer will make their final offer, and if you accept this then the company will move speedily to work with your solicitor or other legal representative to sign all the legal papers and complete the other steps necessary to finalise the purchase. From the moment that you contact the quick buyer to the moment you exchange contracts should only be a few weeks.

For additional protection when selling this way, you could also ask a quick buyer to prove whether or not they belong to The Property Ombudsman (TPO). This independent organisation issues policies, which all members like LDN Properties must follow, that shield owners from fraud in the quick buying industry, therefore giving you peace of mind when selling.

You can check a company’s TPO membership status quickly and for free by visiting the organisation’s website, clicking on the tab marked “Find a Member” and typing in the name of a business. If the company is part of TPO then you will be provided with their membership details, whereas a business that is not a legitimate member will not return any results on the website.

Selling at a property auction

Selling a short lease home through an auction can be a relatively slow choice compared to other methods for finding a buyer. You will need to wait for several weeks or months between the day that you decide to sell this way and the day on which the auction is held. Then, if your home sells, the buyer has about 28 days to sign all of their required paperwork and complete the other steps necessary to finalise the purchase, which delays your sale schedule even further.

Another negative aspect of selling this way is that you will be required to pay the auctioneer commission if they succeed in finding a buyer for your flat or house. Auctioneers charge this fee at about 2.5 percent of a home’s sale price, but it may be higher or lower than this. The fee taken out of the sale proceeds right way, so this will cause your overall selling expenses to rise.

Auctioneers charge this fee to compensate them for the work that they do in selling your home, starting with creating a listing that describes the property and features photographs of the inside and outside, which they then advertise to generate interest from potential buyers. Then they will host the auction itself and oversee the completion of a successful sale of your property.

It’s important note that some auctioneers might never have sold a home that has a short lease, and this suggests that they could find it hard to get buyers interested in your property. Always check with individual auctioneers about their track record with selling a home like yours, and avoid using one that has no experience with being able to attract bids on such a property.

Selling with an estate agent

Selling with an estate agent can be a slow option and it may time a number of months, or even more than a full year, before you get a serious offer. Note also that someone can make an offer but then rescind it, which would cause the sale to collapse. This would significantly extend your selling timeline because you will need to start again with attempting to find a buyer.

But this can nevertheless be a good way to sell if you want someone else to handle all of the work. That’s because the estate agent will be responsible for producing a listing, advertising it, organising viewings where prospective buyers will get to tour the interior and exterior of the property, hearing offers from buyers and trying to get one to exchanging contracts. In exchange for the estate agent putting in all of this effort, you’ll have to pay them commission.

Many estate agents charge commission at an amount between 1.15 percent and 1.40 percent of a property’s final sale price. But the exact rate can be beyond this range, possibly as low as 0.75 percent or more than 3.5 percent, as the website Move iQ notes. This fee adds to your expenses because it will be subtracted right away from the sale proceeds.

You might also find that some estate agents have zero prior experience of selling a property that has a short lease, and this implies that they might struggled to generate any offers from buyers for your house or flat. You should ask estate agents whether they have sold short lease homes in the past, and only use the services of a business that has this type of experience.

Selling without any assistance

Finally, you could consider selling your short lease flat or house on your own, which puts the burden on you to take care of all the steps needed to find a buyer. You will have to put together a listing, advertise it, schedule viewings, hear offers and try to get on to exchanging contracts.

This is a major amount of work and it is not something that you can only do in your spare time, so it can soon become very stressful. That is why you should think about pursuing this method only if you have managed to sell a short lease property before, or if you have a friend or family member who has such experience and who can help you with the selling process for free.

It may also take more than an entire year to sell this way, so if you are looking for a fast sale then you might want to consider other options. For example, you could get in touch with a quick buyer like LDN Properties because the selling process should only take a handful of weeks.

The only clear advantage of selling without any assistance is that you will avoid having to pay commission to an estate agent or auctioneer. Yet you could find that any saving you make this way is eliminated by the funds that you will spend on advertising your listing and other tasks.