Some people don’t realise that selling a flat can be very different to selling a house. The main reason for the difference is that you don’t own the whole property and the land it sits on. Most flat owners in the UK are likely to have a freeholder that they pay ground rent and a service charge to. As a result, you own the flat on a ‘leasehold’ basis only, meaning that when selling there is a lot more that your legal company and the buyer’s legal company have to do to properly transfer ownership.
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Five Key Differences between Selling a House and a Flat
It’s not just the fact that there is a leasehold agreement that affects selling a home, there is also the issue of how long the lease is. Many leases were sold for 100 years and if a lease falls below 70 or 80 years, then many lenders won’t lend unless the lease is extended. That means only cash buyers can buy, so the price that you can sell the property for can drop dramatically, by tens of thousands of pounds.
Follow Kate Faulkner’s five step guide to making sure you sell your flat with ease:-
One: Get your paperwork in order!
Legal companies typically charge an extra £100 to sell leasehold flats. The reason being is that the leasehold document adds an extra complication to the legal process. For example, when you come to sell, there may even be a clause in the leasehold contract that prevents you from putting a ‘For Sale’ board in or outside your property – and that can make it more difficult to sell as most buyers look on-line first, but not all.
Ensuring you have a copy of the lease, the last three years of freeholder’s accounts and information about the service charge and ground rent as well as confirmation of the lease length are essential BEFORE you even market the property. This way the information can be included in the estate agent’s details and if there is a problem, this can be sorted prior to putting the property up for sale, rather than securing a buyer then losing them because of a lease issue.
Two: What’s the length of your lease?
Knowing the length of your lease is essential. No-one will buy your leasehold flat without this information. If they need a mortgage, then the property will need 70-80 years left on the lease. If you have between 70-80 years left on the lease, then you must investigate how much it would be to extend the lease. If you don’t it’s bound to be a question that comes up and it might be better for you to purchase the extended lease as it may cost say £10,000, but then increase the flat’s value by £15,000.
If you need to extend the lease, or a buyer wants to investigate this option, make sure you use a specialist legal company from the ALEP or contact us for help.
Three: What’s the ground rent and service charge?
Any buyer will want to know how much they will have to pay for the ground rent and service charge now and for the next year, so make sure this information is available at least when they view, if not on the estate agent’s details. It’s a good idea to have an easy to understand list of what these charges pay for, for example, looking after the grounds, changing bulbs in the communal area.
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Four: What charges are coming up?
When you are a leaseholder, freeholders will either collect the service charge that will cover any future ‘big’ costs such as replacing the roof, windows or water tanks. Alternatively, these major items may be charged separately. Buyers will need to know what charges are coming up and if you are not upfront about these, you could lose your buyer and the next property you had hoped to purchase.
Five: Noise from Neighbours
If you are in a top floor flat it’s not so much of an issue, but if you are under another flat that has a very noisy person walking around on laminate or wooden flooring it can be an issue. You have to be honest about your neighbours as it is one of the buyer’s questions. So, if you can, sort out any noise disputes beforehand to ensure that it doesn’t stop you selling your property in the future.
Read our selling a home checklist