Buying Or Selling A Leasehold Property


The main things both buyer and seller need to be aware of when buying or selling a leasehold property

Buying Or Selling A Leasehold Property

Buying or selling a Leasehold property is not without its challenges, and we know first-hand the complications that can arise when dealing with this type of transaction.

This post shares considerations for both the buyer and seller, and we hope it provides some clarity on a generally misunderstood topic.

This post is written by Mark King Properties, a professional property cash buying service in South Wales UK.

If you are looking to sell a house fast, contact Mark King Properties today.

The Freeholder owns the land and therefore controls the building.

The Freeholder owns the land and therefore controls the building.

The lack of control is one of the main reasons that it is advisable for buyers to purchase a freehold property whenever possible. However, your dream home happens to be a leasehold property, then it’s important to enquire about the costs involved in obtaining the freehold title.  

If a lease drops below 70 years, it makes the property very difficult to sell, this is because a potential buyer would struggle to secure a mortgage on the property, which can mean that a seller will rely on a cash buyer.

Unethical freeholders often use a short lease as leverage to charge extortionate amounts to purchase the freehold title.

Flat or apartment leaseholders’ may have to form a ltd company, if they wish to purchase the freehold.

Flat or apartment leaseholders’ may have to form a ltd company, if they wish to purchase the freehold.

Flat or apartment leaseholders’ may have to form a limited company, if they wish to purchase the freehold.

Typically, when living in a flat or apartment complex, one would apply to extend a leasehold because the costs of purchasing the freehold are likely to be very high and sometimes impossible. In some cases, a way around this is to explore the option of grouping together with other residents/leaseholders to form a limited company.

If successful, the freehold title will become co-owned by the residents/leaseholders who contributed to the purchase, making them the new management company. This can be a lengthy legal process requiring professional guidance.

freehold title will become co-owned by the residents/leaseholders who contributed to the purchase

Purchasing the freehold means that you are not at risk of being burdened with ever-changing costs in the form of an annual service charge. This can be a huge relief for those residing in larger or, older apartment blocks, as ongoing upkeep, and maintenance charges, prove to be a costly and ever-growing concern.

Once a development acquires the reputation for high service costs, it becomes far less desirable and the properties value decreases, this will then affect the saleability of the property. 

considering to sell or purchase a leasehold property

It’s important that when considering selling a leasehold property or purchasing a leasehold property to gather any documents and certificates relating to the property, such as-

  1. Information regarding service charges
  2. Surplus funds available for repairs to the building
  3. Paperwork or certificates for any historical work that has been carried out
  4. Plans detailing future work that may be in the pipeline

Contact the management company so any necessary documentation can be identified and obtained ahead of time, this will prevent delays and will lessen the chances of the sale collapsing. It also gives the buyer plenty of time to make an informed decision, which means they are less likely to pull out of the transaction.

If a lease reaches or drops below 70 years, it can become hugely expensive to purchase or to extend the lease,  and any potential buyer would find it difficult to secure a mortgage. This means that the seller is restricted to selling to a cash buyer, affecting the saleability of the property, speak to your solicitor to see if it could be factored into the sale price. In doing so, it will enable a surveyor to value the property at the open market value.

There has been a notable increase in the service charges of modern housing developments, and this will become more of a problem as the estates get older. 

In the event of a missing freeholder, or dissolved management company

If you are unable to locate the freeholder, you can carry out a land registry check which can be done conveniently online or by post. For a small fee, it provides available information about the titles and any changes that have taken place and identify the freeholder or management company.

If no records are available, ask your solicitor to arrange indemnity insurance, this will protect you if matters go to court. 

We hope this information helps, and please get in touch if you want to avoid issues when selling leasehold properties, and might like to consider a professional cash buyer today. 

We hope this information helps, and please get in touch if you want to avoid issues when selling leasehold properties, and might like to consider a professional cash buyer today. 

Related Posts You Might Enjoy in the "How to Sell a House" category


Looking for more from the "How to Sell a House" category?

How much is your South Wales house worth?

Exclusive to South Wales. Fill in this simple form for a quick cash offer.

Click Here & Get a Cash Offer For Any House Now!
WHATSAPP CHAT TO MARK KING PROPERTIES
WHATSAPP CHAT TO MARK KING PROPERTIES

Get Your Cash Offer Now

Local South Wales Property Cash Buyer for Over 20 Years

Mark King Properties Google Reviews
Mark King Properties Wales Online
rent smart wales
property-ombudsman logo
facebook reviews for Mark King Properties