Leases with less than 75 years left can hold up a sale
- 24th August 2011
- Selling Property News
Applying for permission to extend the lease can help London leaseholders to sell their property.
Sellers can make an application to extend the lease before they sell. Using what is known as a Section 42 process, the extension is then completed when the buyer takes ownership and makes the relevant payment to the freeholder.
This means that the new owners can benefit from an extended lease without having to wait to qualify for an extension in their own right.
Stephen Ludlow, Chairman of ludlowthompson, comments: “Many London property owners are leaseholders which can make a big difference when it comes to selling, particularly if the lease expires within 75 years.”
“Buyers might be put off by a property that only has a short lease left, especially as they will have to wait a further two years before being able to renew the lease themselves.”
The cost of a lease extension is calculated in reference to current house values, so it is more expensive to extend a lease when house prices are surging.
Stephen Ludlow explains: “Given the economic uncertainty, it is impossible to predict which way the property market will move in those two years and buyers will be fully aware of this. While it may seem like a small snag, it is the sort of detail with the potential to derail a transaction.”
“Sellers who talk to their solicitor and apply for a lease extension prior to selling their property will maximise their chances of selling their property quickly.”
“For those unwilling to extend their lease prior to sale, it is worth recognising that buyers may expect to negotiate a discount to the asking price to take into account the amount they will have to pay to extend the lease further down the line.”
Many London property owners are leaseholders which can make a big difference when it comes to selling.
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