Buying or selling a leasehold property
I am buying / selling a leasehold property with a short lease
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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.
Arnold & Baldwin also provide residential surveys and can provide both the survey report together with the valuation report for complete peace of mind.
Further information
lease extension process – learn more Moving home checklist and next stepsWhat is a Leasehold?
Leasehold means that you own the property, but the land upon which the property is built is owned by the freeholder (or landlord).
This gives you the right to occupy the property for as long as the lease is valid.
What is Ground Rent?
If your property is a leasehold property, you will have to pay an annual charge known as ground rent to the person who owns the freehold.
What is a Section 42 Notice?
A Section 42 Notice (also known as a Tenant’s Notice) is served on the landlord/ freeholder of a property and starts the purchase of the freehold or lease extension process. Once a valuation of the property has been carried out by your surveyor they will send the valuation on to your solicitor.
Next your solicitor will serve a Section 42 Notice on your landlord/ freeholder advising the amount you are willing to pay for the freehold.