Selling a leasehold flat? What to do before going on the market
Before marketing a leasehold flat, there are a few critical steps you can take to minimise typical delays that might threaten the sale
Leasehold is more complicated than freehold
There are many issues that can arise when you come to sell your flat that are unique to leasehold property.
In particular, the sourcing of managing agent information can add weeks to the conveyancing process.
A prudent seller can take several steps to help avoid such delays.
Confirm your property's tenure
Do you know whether your property is leasehold, freehold or "share of freehold"?
If your property is a flat then it will almost certainly have a leasehold title, there are relatively few leasehold houses in England and Wales.
Houses are generally owned with freehold title but this is not always the case. See: Guardian Article published on 21 September 2017.
New-build leasehold property
If you are the first owner of a recently-built property, there is a chance that it is in fact leasehold. Some property developers have taken to selling new-builds as leasehold to generate income through ground rent and service charges.
You can obtain information from HM Land Registry, through the gov.uk website. For a small fee, the Land Registry will supply copies of registered property titles, including details of a property's tenure.
If you are unsure whether your property is leasehold or not, the best thing would be to contact a conveyancing solicitor as soon as you decide to sell.
When selling a property it is a good idea to instruct a solicitor before you even find a buyer. The solicitor can make significant progress before a buyer even makes an offer, potentially shaving weeks off the process. Choose a solicitor who offers "No Move, No Fee" so you don't incur any fees in the (hopefully unlikely) event you don't find a buyer.
How long is left to run on the lease
In the first place you should check the length of time that your lease has left to run (often called the 'unexpired term'.)
If this is less than 80 years, then the value of the property will start to decline, and if it is less than 60 years then it will be very difficult for a buyer to obtain a mortgage.
Should you be in this situation, you will need to consider taking steps to extend the lease. Extending a lease can be a lengthy process, the details of which your solicitor will explain to you. As a general rule, this process should be started as early as possible, as delays will be almost inevitable.
Restrictions in the lease
Another preliminary question is whether the lease contains any restrictions on selling the property or requires freeholder's consent to a sale of the property.
This caveat does not apply to most residential properties, but leases of retirement properties usually contain an age restriction on would-be owners.
Shared-ownership leases, whether of houses or flats, frequently require the property to be offered back to the Housing Association or other freeholder before the property can be sold on the open market.
Shared ownership is where the buyer has not purchased the property outright, but has bought a "share" of the property under a scheme like the Government's Help to Buy.
The Leasehold Information Form
When a leasehold flat or house is sold the buyer is expected to complete a questionnaire known as the 'Leasehold Information Form'.
Collate all the leasehold information as early as possible
The information required on this form and the additional paperwork requested can take a little time to put together.
It is advisable to collate information before you have found a buyer. The first thing to do is to collect together all paperwork relating to the flat, in particular:
- A copy of the lease if you have one (or even the original lease if that was previously sent to you.)
- The name and address of the freeholder/landlord or managing agents who collect service charges and any ground rent. (NB If ground rent is paid to one person and service charges to a separate person or company details of both will be required.)
- All records relating to any payments you have made, especially demands for service charges and ground rent.
- Any notices or correspondence from or sent to the freeholder or managing agents. This will include notices of proposed major works to the building even if these have not yet been carried out.
- Whether you (and/or other flat-owners in the building) have taken steps either to buy the freehold (known as leasehold enfranchisement) or to set up a Right-to-Manage (or RTM) company.
Do not worry if you do not have all this information, but try to find as much as you can, so that you can complete the Leasehold Information Form promptly.
Although you should complete the form as comprehensively as possible, the buyer's solicitors will also require information from the freeholder or their managing agents. The normal procedure is for sellers' solicitors to do this once a buyer has been found.
To avoid unnecessary delays it is important to ensure these enquiries are sent to the correct address. This address should be stated on any demands for ground rent and service charges, but if you do not receive such demands it will be necessary to try and find the relevant details.
Identifying the correct party's contact details can take some time, so it is helpful to get this information before marketing the property.
If a RTM company or some other company controlled by the flat-owners handles building management, your solicitor will also have to send enquiries to them and will require contact details. This may be the Company Secretary who could be one of the flat-owners in the building.
You should try to contact this person to let them know you are planning to sell and to confirm that they will respond to enquiries.
Share of freehold
It may be that you own a share of the freehold of the building, or a share in a company that owns the freehold. (e.g. when the freehold has previously been acquired under Leasehold Enfranchisement legislation.)
In such cases arrangements will have to be made for your share to be transferred to the buyer on completion. This may involve a simple transfer of a share certificate.
If you are actually one of the registered owners of the freehold title jointly with the other flat-owners they will all have to sign a formal transfer form before the sale is completed. Delays can occur if for example a flat owner lives abroad and cannot easily be contacted.
Your solicitor will handle the legal formalities for the transfer, but it is a good idea to contact the other flat-owners beforehand to check that they are available to sign promptly.
Selling any leasehold property tends to be more complicated than selling a freehold, so it is well worth contacting a solicitor before marketing the property.
Any potential difficulties can then be addressed which will mean that the sale can proceed quicker once a buyer has been found.