How do you sell a leasehold property?

Selling a leasehold property involves a few extra steps compared to a freehold sale, but don't worry – we'll guide you through the leasehold sale process step by step. Here's a comprehensive overview of how to sell a leasehold property:

1. Get approval: First up, you might need to get approval from the freeholder or their management agent for the lease transfer. Expect to pay some admin fees for the freeholder to complete the LPE1 form.
2. Gather key documents: Before marketing the property, gather all critical leasehold documents. This includes the lease agreement, recent ground rent statements, and service charge accounts – essential documents for selling a leasehold flat.
3. Find an estate agent: Contact a few of them and get a few valuations before choosing your preferred option.
4. Check your lease term: Check the remaining lease term carefully. If it's getting short (especially under 80 years), consider extending the lease before selling, as this can significantly impact the property's value and saleability.
5. Choose an experienced conveyancer who specialises in transferring ownership of a leasehold property and understands the unique complexities of leasehold transactions.
6. Hit the market: Market your property and secure an offer. Once the property is under offer, the formal sale process begins.
7. Be responsive: When you find a buyer, be prepared to respond to queries and provide a comprehensive leasehold management pack alongside standard seller's forms. The freeholder of your lease will charge for this documentation.
8. Exchange contracts, making the property transaction legally binding.
9. Complete: Reach completion day, when the sale is finalised, keys are released, and the buyer becomes the new legal owner.

Let’s start with the basics. A leasehold property is a property you own the right to live in for a set period, rather than owning the property or land it sits on outright. Think of it as a long-term rental agreement, where you have a lease from a freeholder, which can impact how you can sell a leasehold property.

As a leaseholder selling the property, you’re essentially passing on your rights under that lease to a new buyer. Lease terms can vary but are typically quite long – often 99, 125, or even 999 years when first granted. The remaining time left on the lease is a critical factor when selling a leasehold property, as the property becomes less valuable as the lease term gets shorter.

The freeholder while owning the land, has little control over your leasehold day-to-day. However, they’ll likely charge annual ground rent and service charges that cover maintaining the building and any communal areas, which can affect the sale of a leasehold property.

The simple answer is yes, you can sell a leasehold property. Although there are some extra considerations and documents compared to selling a freehold property.

One of the biggest factors to consider is the remaining lease term left on the property. The more years left on the lease when you sell, the more valuable and marketable your home will be to buyers.

If the lease only has less than 80 years left, it can seriously impact what buyers are willing to pay and their ability to get a mortgage on the property. This is what can make selling a leasehold a little more difficult.

You may also need to get approval from the freeholder (the landowner) that they are happy for the lease to be transferred to the new buyer, though not all lease sales require this.

When selling a leasehold property, you'll need to provide the buyer with comprehensive info about the lease – the start date, duration, current ground rent, service charges, and other critical details.

Many property owners ask, is it hard to sell a leasehold property? While selling a leasehold isn't necessarily harder, it does present some unique challenges that can make the process more complex.

Here's some things to consider when selling a leasehold:

1. Time and complexity:

• The process is often more long-winded
• It usually takes more time due to freeholder involvement
• Additional paperwork and documentation are required

2. Factors that can make selling a leasehold property harder:

• The remaining lease term - shorter leases are significantly less attractive
• Potential disputes or issues with the freeholder
• Risk of providing incorrect leasehold information to buyers
• Restrictive clauses in the lease, such as pet ownership limitations

3. Preparation is key:

• Gather all necessary documentation early
• Address any potential issues with the lease or freeholder
• Consider extending the lease if it's approaching a critical length

4. Expert assistance:

• Work with a real estate agent experienced in leasehold sales
• Consult with a solicitor who specialises in leasehold properties

While selling a leasehold property can be more challenging, being well-prepared and understanding the process can make it smoother. With the right approach and professional help, selling a leasehold property doesn't have to be significantly harder than selling a freehold property.

You’re going to need to gather a few bits of paperwork to sell your leasehold. Here’s a breakdown of those documents:

• Copy of the lease agreement: The full legal contract between you and the freeholder
• Leasehold management pack/LPE1 form: Contains critical information about:
• Current ground rent amounts and payment schedule
• Service charge details and payment history
• Planned major works and associated costs
• Building insurance information
• Management company details
• Safety certificates (including asbestos surveys and fire safety assessments)
• Evidence of lease compliance: Proof you've adhered to lease terms
• Freeholder consent (if required by your lease)

• Proof of identity and address
• Property title deed
• Energy Performance Certificate (EPC)
• Property Information Form (TA6)
• Fittings and Contents Form (TA10)
• Warranties and guarantees for work completed

If you’re considering renting out your leasehold instead of selling, whether you can depends on your leasehold agreement. More often than not, your leasehold agreement will outline one of the three following:

• You can’t sublet at all, under any circumstances.
• You can sublet if you get permission from the freeholder.
• You can sublet without the need for freeholder consent.

If there is no mention of subletting in your agreement, then the appropriate step would be to contact a legal professional to have a look at your agreements and advise on the next steps.

Some leases may include additional restrictions, such as you can’t sublet a property:

• In part, this means you can’t for example rent out your property and not your garage.
• As a holiday or short-term let
• For business purposes

If you don’t adhere to the conditions laid out in your agreement, your freeholder would be within their rights to take legal action.

It’s important to note that as the leaseholder, you would ultimately remain responsible for paying the ground rent and service charges, even when the property is rented out to tenants.