It can be difficult to sell an apartment with a very short lease because buyers and mortgage providers prefer properties with longer leases. That doesn’t mean selling a flat with a short lease is impossible. By using the right strategy, you can find a customer and negotiate a great price. Find out how you can sell flat with a short lease quickly and at a good price.
What Is Considered To Be A Short Lease?
Short leases refer to properties with a remaining lease of less than 80%. This is important because if a property’s lease expires before 80 years, then the cost of extending the lease increases significantly due to marriage value. This is an additional payment that is made to the owner to compensate them for the increased value of their property.
Most mortgage providers are reluctant to lend money to flats with short leasing terms, which makes them difficult to market to buyers needing a home loan. These properties tend to be best sold by cash buyers and investors.
How Does Short-Term Leasing Affect Sale Price?
A short-term lease can have a significant impact on the market value of an apartment. The shorter the lease term, the lower the price of the flat will be. For example:
- A flat less than 70 years old could see a 15-20% value reduction.
- If you have a lease for 50 years or less, your property will be nearly impossible to sell without an extension.
- It is not attractive to both buyers and banks if the loan term is less than 30.
Options For Selling An Apartment With A Short-Term Lease
Sell The Flat By Extending Your Lease Agreement
If you want to sell the house but don’t plan to extend the leasing agreement, you could agree with the purchaser to start the extension process. They would then receive the benefit. This approach is attractive to buyers looking for a longer-term lease without having to wait more than two years.
Sell To A Cash Or Property Buyer
Due to the fact that mortgage lenders do not like financing short-term leases, cash buyers or investors are usually your best bet. Investors can often find value in buying short-lease houses at a discount and extending the lease to gain long-term. If you are selling a property that has been leased for many years, the value will be discounted.
Select An Estate Agent Who Specialises In Short-Lease Sales
Some estate brokers specialise in selling leaseholds with short leases. They know cash buyers and investors who are interested in these properties. This may be a good option if you need to move quickly.
Sell At Auction
Selling your flat through a real estate auction is also a viable option. Many investors and cash buyers attend auctions to search for properties with shorter leases. Auction sales can be quick and secure, as the winning bids are legally bound, so it’s unlikely that they will fall through.
How To Maximise Your Sale Price
Here are some tips on getting the best price for your home if you choose to sell it without extending the lease:
- Be Transparent: Make sure you disclose the lease period early on to avoid any delays.
- Price Competitively: Work with the estate agents to set a reasonable price that reflects your lease term.
- The Investment Potential: Highlight how an extension of the lease will increase property value for investors.
- Targeting the Right Buyers: Target cash buyers, property investors, and buyers who understand the process.
Conclusion
It takes careful planning to ensure that a sale of a flat is booming, but there are a number of ways you can do this. No matter whether you extend the contract before selling, target cash buyers, or sell at an auction, it is vital to be well-informed and to work with professionals.
If you’re looking to sell an apartment with a limited lease quickly, talk to a specialist about your options. With the right approach, you can achieve a reasonable sale price while moving forward with confidence.
