You might have heard that it's harder to buy or sell a leasehold property. Well, we’re here to debunk that myth.
The only difference is that it can take longer for a sale to go through because there is more legal work to do on a leasehold home.
An estimated 4.5m people in the UK own leaseholds. They managed it and so can you.
In case you need it, here’s our guide to the difference between leasehold and freehold.
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Key questions about buying and selling leasehold home answered:
1. How long does it take to sell a leasehold property?
The legal paperwork on a leasehold property typically takes three weeks longer than a freehold.
There are more moving parts in a leasehold transaction, which makes problems and delays more likely.
“Freehold sales take around six to 10 weeks and leasehold sales around eight to 12 weeks to complete,” says Chris Salmon of Quittance Legal Services.
“In reality, the conveyancing process can take anywhere from just a few weeks to not completing at all.
“A third of all sales fall through. As leasehold sales take longer and are more complex, they are more likely to fall through.”
2. Why do leasehold properties take longer to sell?
A leasehold home might sell faster or as fast as any property on the market.
Once you’ve accepted an offer, that’s when things can slow down a bit.
As well as searches, contracts and all the normal conveyancing for any sale, your solicitor will also need to:
review the terms of your lease
correspond with the landlord, managing agent, management company or residents’ association
review the management accounts
identify any planned works
ensure the mortgage lender’s requirements are met
investigate any disputes.
Once your solicitor has this information, they will share it with you and your mortgage lender.
3. Is it harder to get a mortgage on a leasehold?
Yes and no. You can get a normal mortgage on any leasehold property.
But homes with short leases can complicate matters. Some lenders choose not to lend against leasehold homes with fewer than 85 years remaining on the lease.
If you discover your lender will not give you a mortgage against a property weeks into a sale, you will need to find another lender. This can cause knock-on delays.
Your solicitor will report to the bank or building society once the legal checks listed under question two are complete. The lender will then confirm or withdraw their mortgage offer.
4. Can I extend a lease before buying a new home?
You are not able to apply for a lease extension until you have owned a property for two years.
If a lease has fewer than 80 years remaining, the cost of extending the lease increases dramatically.
Your seller may decide to start a leasehold extension process as part of the sale, especially if the lease is approaching 80 years. They can then transfer the ownership of it to you.
While a lease extension as part of a sale is a good option, this process adds further work, time and complexity to any sale.
5. What if I have a share in the freehold?
Share of freehold adds even more complexity to selling a leasehold.
Owning a share of a freehold is not the same as owning a freehold.
Usually, each leaseholder (in a block of flats, for example) owns a share in a management company that owns the freehold of the whole building.
Your solicitor will need to work out and convey the management of the freehold as part of the sales process.
6. How can I speed up a leasehold sale?
If you’re selling a leasehold home, you can play a big part in speeding up the sale.
Find a solicitor who specialises in leaseholds as soon as you put your home on the market.
Apply for a freeholder information pack ASAP
Your solicitor will ask you to apply for an information pack from your freeholder.
There can be fees of hundreds of pounds from your freeholder to get this information. This might put you off applying for it before an offer is on the table.
But ordering this information pack before you find a buyer can shave weeks off the sales process. It can take three or more weeks from the application date before you receive it.
No matter how keen your buyers are, if you don’t have this information you will delay the conveyancing until it arrives.
Return paperwork as soon as possible
Your solicitor will send you various forms to fill out.
Nothing can happen until the TA7 Leasehold Information Form is with your solicitor, so complete and return them without delay.
Give your solicitor any other documents they request as soon as possible.
Give buyers information about the lease upfront
Make sure you have a copy of your lease and share it with your estate agent.
The terms of the lease can then be included in the way the property is marketed.
Your buyers can then make more informed decisions upfront. For example, they may choose a different mortgage lender if the lease is shorter.