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Leasehold owners of flats or other properties can sometimes get into disputes with the building’s freeholder over issues including service charges, boundaries and more. Having such a dispute ongoing could make it harder to sell your home, as this guide explains, but it’s also possible to still attract a swift and competitive offer from a buyer if you follow certain steps.
- How a dispute between the freeholder and leaseholder complicates selling a flat
- Examples of disputes that you might have with your freeholder
- Do you have to tell potential buyers about a dispute with the freeholder?
- Deciding whether to try resolving a freeholder dispute before selling a home
- Choosing how to sell a property that has a freeholder dispute
- Frequently asked questions about selling a home with a freeholder dispute
How a dispute between the freeholder and leaseholder complicates selling a flat
There are two main types of residential property in the UK – freehold and leasehold. And sometimes a dispute between a freeholder and leaseholder can make it hard to sell a home.
A freeholder owns the property and the land on which it is located outright, whereas a leaseholder owns a home, typically a flat, for a set number of years as designated in a lease agreement that they sign with the freeholder who owns the building that includes the unit.
The leaseholder will also have to pay annual ground rent and service charges that help pay for the overall upkeep of the building, and they may have certain repair or cleanup duties as well.
Unfortunately, there are many instances where the leaseholder might have a dispute with the freeholder over various aspects of the lease agreement or other issues about the property. And this in turn can make it harder to attract buyers to make an offer on your home.
One significant complication with a freeholder dispute and attempting to sell your home is that the freeholder could try to move to block any sale until the issue is resolved, as noted on the website of property experts Fraser Bond.
Below you will find all the information you need to learn about the various disputes that can occur between a freeholder and a leaseholder, and what this means for selling your home.
Whatever your justification for wanting to sell your property – such as wanting to buy your next dream home, needing to raise funds for a move abroad, planning for your retirement or anything else – this guide explains the challenges you might face, but also shows how a fast and fair offer is still possible.
Examples of disputes that you might have with your freeholder
There are many different types of disputes that can occur between a freeholder and a leaseholder, as explained by Bonallack & Bishop Solicitors. Some might be relatively easy to resolve in certain cases, whilst others could be all but impossible to solve.
Service charges: A common fight between freeholders and leaseholders can happen over service charges, which are the fees a leaseholder pays as detailed in the lease agreement. These funds help to pay for the overall maintenance of the common areas of the building, but sometimes the charges are very high and leaseholders might object to paying them.
Repair work: There are many structural problems that can occur both within a leaseholder’s home and also at the overall property, whether that’s storm damage, rot, damp, a leak or anything else. There is the possibility that a freeholder and leaseholder might argue over who is responsible for organising and paying for the repair work, leading to a stalemate.
Lease extension: Another problem that might arise can happen if the leaseholder doesn’t have many years left on the lease agreement and wants to extend it, but the freeholder objects to a lease extension – and this can be a very complicated and long process to resolve. Short lease properties are often seen as much less valuable to buyers than those with lengthy leases.
Boundary dispute: Boundary disputes can occur when you and the freeholder are at odds about the exact ownership of certain space at the property, including walls, fences and more, particularly if the freeholder also lives in the same building, and it can affect your ability to renovate or make other changes to the home. The stress of dealing with such a dispute could discourage some potential buyers.
Do you have to tell potential buyers about a dispute with the freeholder?
If you have a current dispute with your freeholder then you might be wondering whether you can simply conceal this fact from buyers, to make it easier to sell your property. Be warned that hiding details about any type of fight with the freeholder is something you should never do.
When you are attempting to sell your home, you may have to fill out a Property Information Form, more commonly referred to as simply the TA6. This document asks a long list of varied questions about your home, and one of the questions includes whether there are any current or past disputes over the property – and this is where it’s vital that you answer fully and honestly.
This requirement to be completely upfront in your TA6 answers is a legal mandate, and you could face serious consequences if you try to conceal the dispute from a buyer.
If you withhold information and the fight and someone purchases your property and later finds out about the unresolved dispute, or even a prior resolved dispute, then they could pursue legal action against you for failing to disclose the situation on your TA6 form. This may result in a lengthy, stressful legal process that ends with you have to pay significant penalties.
Deciding whether to try resolving a freeholder dispute before selling a home
Any type of ongoing dispute that you have with the freeholder could make it harder to sell your home, as Completely Moved says. That’s because many potential buyers will be worried about the time, stress and other negative aspects of taking on that dispute as your home’s next owner.
One option that you might want to consider is trying to fix a fight with your freeholder before attempting to sell your property. This would remove the dispute as a concern for prospective buyers and therefore could potentially make it easier to attract offers on the home.
Whether or not you will be able to reach a resolution with your freeholder will be highly specific to your unique circumstances and it can be affected by many factors including the possible cost and time involved with settling a dispute. Another uncertainty is whether the freeholder even has any interest in trying to reach an agreement with you that would end the fight.
Should you lack the interest, time, funds or even the ability to resolve a dispute with your freeholder, then you still have solutions for selling your home. As explained in more detail in the next section of this guide, one option is contacting a quick buyer that has plenty of experience with buying homes where there’s an ongoing dispute with the freeholder. You should be able to complete the sale within a few short weeks and you can also avoid paying any commission.
Choosing how to sell a property that has a freeholder dispute
A major decision you will need to make when selling your property whilst there is still an ongoing dispute with the freeholder is deciding which method to use for finding a buyer. Usually, you will be able to choose from selling your home to a quick property buyer, selling with an estate agent, selling through an auction or selling without any third-party help.
There are clear pros and cons associated with each of these strategies regarding the time that they take, the costs involved and other factors. By way of example, you would need to pay commission to an auctioneer or an estate agent if they sell your property, and this will add to your expenses, but selling to a zero-commission quick buyer helps you avoid any fees.
It can be helpful to make a note of your top priorities with selling your home, including how fast you want to sell, your willingness to pay any commission, and your ideal sale price. Then compare these elements against the specific information about all four selling options below and this should help with you identifying which one is the best suited to your needs.
Selling to a quick home buyer
LDN Properties is an example of a quick buyer, which is a company that has the financial capability to purchase all types of freehold and leasehold homes right away. They don’t have to wait for several weeks or even months to first get authorised for a mortgage to afford buying your home, so this cuts the typical selling timeline down to just a handful of weeks.
These companies are also renowned for making competitive and rapid offers to buy all categories of home, regardless of their age, condition, location, shape, size or type, and that includes so-called problem properties, such as those that have a freeholder dispute.
LDN Properties launched roughly two decades ago and since that time it has purchased many different types of homes in the UK, including properties that have a freeholder dispute, as well as flats with a short lease, homes that have an infestation, properties underneath noisy airport flight paths, houses of multiple occupancy, flats that have an expensive ground rent, hoarder’s homes, bed and breakfast properties, houses situated close to an industrial estate, flats with a leak, and other scenarios.
Another important benefit of selling to a quick buyer is that you will never have to pay them any commission on the sale of your home, which means you are assured of receiving the full sale proceeds. That compares favourably to selling via an auctioneer or an estate agent, as you will have to pay them fees if they sell your property and this commission would increase your overall expenses because the charge will be subtracted from the eventual sale proceeds.
Selling with an estate agent
Alternatively, you could attempt selling your home with a freeholder dispute with an estate agent, who will take care of most of the tasks needed to find a buyer.
They will first create a listing that features photographs of your home’s interior and exterior as well as a description of it, and they will advertise this online, in local newspapers and their office. Next they will schedule viewings to give people the chance to tour your property, and finally they’ll hear offers, trying to get one to a final sale.
Not having to do any of these steps can be a great way to reduce your stress when selling, but note that you will have to pay the estate agent commission if they manage to sell your home. This can be charged within a range from 1.15 percent to 1.40 percent of your property’s final sale price, and the fee will add to your costs as it is taken out of the proceeds right away. If you want to keep your costs down when selling then you may want to review some of the other options available, such as selling to a zero-commission quick buyer like LDN Properties.
Selling through an estate agent might also take a long time and you should be prepared to wait many months or even more than a full year before you complete a sale. If you are trying to find a buyer as fast as possible then you should review other options, such as selling to a quick buyer where the timeline is only a few weeks, and that includes exchanging contracts.
You also run the risk when selling this way of having someone make an offer but then change their mind and cancel it, prompting the sale to collapse – and they can do this without being subject to any penalties so long as you have not yet exchanged contracts. You would then need to start over with looking for a buyer, delaying your selling timeline even further.
Another step you should take is asking individual estate agents about their current and past track record of selling homes like yours that have an ongoing dispute with the freeholder. That’s because any estate agent that has no history of managing to sell such a property could struggle to generate any interest in your flat or other type of home from prospective buyers.
Selling through an auction
Or you could try your luck with an auction to sell your property that has a freeholder dispute, and this involves people placing bids of ever-increasing prices on the home, with the top value bid at the time the auction ends being named the winner and the person that is buying your property.
This is an uncertain way to sell any type of home because you could receive zero bids, which means it does not sell and then you have to begin again with trying to find a buyer, delaying the overall process further. Or you might get just one bid at the reserve price, which is the lowest value at which you agree your property can sell. A bid at this level is a binding legal agreement to sell your home, and the buyer can sue to enforce the sale if you try to abandon it.
That’s why you need to calculate a reserve price that should produce a profit from the sale even after you have paid the auctioneer the fee that they will charge for their work selling your home. Otherwise, you risk only breaking even on the sale or potentially selling at a loss.
Auctioneers often charge commission at a rate of 2.5 percent of a property’s sale price although the exact amount may be higher or lower than this, as the website HomeViews says. The fee adds to your expenses because it will be deducted immediately from the eventual auction sale proceeds. If you are trying to keep costs low with selling then you want to look at some no-fee options available, such as contacting a quick buyer like LDN Properties.
The fee covers the work that the auctioneer will do in preparing a listing, advertising it, hosting the auction and then overseeing the final stages of a successful sale of your home.
It’s far from the quickest way to sell a property because there is a lot of waiting involved, such as many weeks or longer between the day on which you decide to sell using this method and the day on which the auction takes place. If your home does sell, the top bidder then has about a month to sign all the legal papers and finish their other tasks needed to complete the sale.
Also, it is crucial to ask auctioneers if they have managed to sell homes with a freeholder dispute in the past, because anyone that has never found a buyer for such a property might therefore find it difficult to get prospective buyers interested in your home ahead of the auction.
Selling without any third-party help
Yet another way to try selling a home where you’re currently experiencing a dispute with the freeholder is doing so without the assistance of an estate agent or auctioneer, and this means handling all of the work needed to find a buyer. You will need to put together and advertise a listing, organise viewings and hear offers from potential buyers.
All of these steps will require a lot of time and effort, and therefore this can quickly become a stressful approach for selling a home. It’s only recommended if you have previously managed to sell a home like yours, or if you have a suitably qualified family member or friend that might be open to assisting you with the selling process without charging you anything.
Without this experience, it may take many months or even more than a year before you’re able to sell. And remember that someone can make an offer but then rescind it, which they can do without facing any penalties if you have not yet reached the exchange of contracts. You would then need to start over with looking for a buyer, extending the selling schedule much further.
Perhaps the sole clear advantage of selling without any third-party help is that you will not have to pay any commission on the sale, which reduces your total costs. But this saving may be cancelled out by the funds you’ll have to spend on marketing your listing and other steps.
If you are committed to avoiding fees when selling, you could instead consider selling to a no-commission quick home buyer like LDN Properties. This would give you the benefit of not having to pay any fees, as well as the perk of getting a much speedier sale because these companies can typically finalise the process of buying a home within a few short weeks.
Frequently asked questions about selling a home with a freeholder dispute
Since 2003, LDN Properties has bought homes of all types across the UK, including those with a freeholder dispute. Here you can find our answers to some top queries about these homes.
Your top questions when selling a flat with a freeholder dispute
Leaseholders own a property, typically a flat, for a set number of years as specified in a lease agreement that they sign with the freeholder who owns the building in which the home is located. If a leaseholder has a disagreement with the freeholder over any issue, such as boundaries, service charges or anything else, this is considered to be a dispute.
If you have an ongoing dispute with your freeholder about any aspect of your home, this can complicate your attempt to sell it because many buyers will be nervous about potentially having to take on the fight once they are the next owner of the property. They could also worry that the dispute might be impossible to resolve, and simply lose interest in making an offer.
Yes, if you fill out a Property Information Form, which is often known just as a TA6, then this will ask you to tell sellers about any disputes that you have previously had or are currently having at your home. It’s important that you honestly and fully disclose any freeholder disputes at the property because failing to do so can create legal problems that may result in penalties.
Trying to reach a solution with your freeholder is certainly an option, but this can often require a lot of time and money to achieve, and this might not be feasible if you are trying to sell fast and with minimal costs. In such a situation, you could instead sell to a quick home buyer like LDN Properties that has plenty of experience buying homes that have an ongoing freeholder dispute.
You can choose from selling through an estate agent, selling at a property auction, selling without any help from either of these third parties, or selling to a quick buyer such as LDN Properties. Each of these methods have their own advantages and disadvantages based on time taken, costs and more that you should learn about before making a decision.
The speediest way to sell any type of home is usually with a quick buyer like LDN Properties because the entire process should only take a handful of weeks, and that includes the exchange of contracts and paying you the proceeds. The other options of selling with an estate agent, selling at an auction or selling without any help can all take at least several months.
You will need to pay commission to an auctioneer or an estate agent if you choose to sell your property using their services, and this charge will increase your total expenses because it will be taken out of the eventual sale proceeds. But you won’t need to pay any fees if you opt to sell your home on your own or if you sell to an honest no-fee quick buyer such as LDN Properties.
