Buying or selling a leasehold property with a short lease?

Buying or selling a leasehold property?

Buying or selling a property with a short lease requires accurate due diligence. You are only entitled to extend a lease after 2 years of ownership.

Preparing a lease extension valuation, and serving a Section 42 Notice to transfer with a sale, may protect your investment. 

Speak with our leasehold experts to discuss your specific requirement. 

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Buying a leasehold property with a short lease?

When purchasing a leasehold property your solicitor should advise you on the terms of the lease, the ground rent and how long is left. The agent does not always do this and are sometimes wrongly advised by the vendor.

When leasehold properties have 90 years or less remaining, the value of the lease decreases and at 80 years it becomes significantly more expensive to extend the lease.

If you are thinking of buying a leasehold property with less than 90 years remaining, it may still be a good investment at the right price, however, the price you pay may itself impact on the cost of the extension.

You will only have the right to extend the lease if you have been the registered owner for 2 or more years.

One way around this is if the vendor is a qualifying tenant, they can serve a Section 42 notice and transfer this with the sale, so you do not have to wait two years.

We recommend you have a valuation undertaken to ascertain the current value of the property, the likely cost of the lease extension and the value once the lease is extended.

Information to help you along your property journey

The Lease Extension Process

Under the Leasehold Reform, Housing and Urban Development Act 1993 a leaseholder is entitled to a 90 year extension and a peppercorn ground rent (effectively nil value) as long as they have owned the property for more than two years and the original term was in excess of 21 years. Read more about the lease extensions process

 

 

Moving Home Checklist

The legal process should be well underway by now and hopefully, your survey has taken place too (or is booked in) and searches have been applied for by your conveyancer. With a little over a month until your moving day, it is time to start clearing out anything you don’t want to move to your new home. Removal companies usually quote on volume so the less you have to move to your new property the cheaper it will be. Read more

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