Many leaseholders will not consider the possibility of their lease being extended until they are ready to sell their flat. It is important to know how many years remain on your lease before you sell your property. A decreasing lease will make it difficult for potential buyers to get a mortgage.
How to sell flat with a short lease? Home house buyers can help you extend your lease.
Owners of flats or other leasehold properties constructed around 2000/2001 feel the pinch of financial difficulty when trying to sell a property that has a lease of close to 80 years.
A new buyer would need to wait for two years before they can start the formal lease extension process. Their mortgage company will not lend against a property purchased on a short-term lease.
Mortgage lenders have also tightened their criteria. They are now more attentive to the value of leasehold properties and the possibility of selling them.
Home house buyers are seeing mortgage lenders increase their minimum lease terms to 85 and 90 years. The standard requirement for a mortgage lender was 70 years three or four years back. It was 50 years or 55 years before that. That was if the lender considered everything!
What Can You Do If Your Lease Is Less Than 90 Years Old And You’re Selling Your Flat?
It is best to extend your lease before you put a property up for sale.
There are options if you need to quickly sell your property and don’t have enough time to extend the lease.
The solution is to link the formal lease extension with the sale process.
This option allows you to serve the lease extension notice to the freeholder as a seller after contracts have been exchanged. After the transaction is complete, the sale contract will deal with the assignment of the right to extend. The price of the lease extension will be determined between the seller and buyer.
The buyer can assign the right of lease extension as part of the sale process. This means that the buyer doesn’t have to wait two years before they can exercise their right to extend the lease. This could be crucial from a financial perspective.
However, it is important to make sure that the mortgage lender is fully aware of the assignment and willing to lend. For assistance with this, you will need to speak to an experienced lease extension professional such as Home house buyers.
Leaseholders might be tempted by informal lease extensions to speed up the process, but this will come at the expense of the premium and future ground rent commitments. It will also be more difficult to get a mortgage because the freeholder isn’t required to cooperate. Therefore, the lease extension is not guaranteed.
Please get in touch if you’re selling your flat or need to discuss your best options for extending your lease. Home house buyers’ team is happy to assist.