Can you sell a leasehold flat?

If you live in an up-and-coming area, you may have a leasehold flat you want to put up for sale. However issues like short leases and cladding can leave you wondering ‘is it easy to sell a flat?’.

Read on for our definitive guide to selling a leasehold flat.

Is the process of selling a flat different from a house?

Selling a flat is essentially the same as selling a house. All sellers go through the same processes of valuation and conveyancing. However, there may be greater difficulty in selling a leasehold flat.

For now, here are the basic steps you need to take to get the best deal from the sale of your leasehold property:

Valuations

It's crucial to get an accurate valuation of your home. Professional estate agents can help you calculate this figure based on supply and demand in your area, the building's condition, and more.

Leasehold flat sellers should aim to get around three valuations from different estate agents in the area. From there, you can pick the best price –– one that will assure you a great deal and a fast sale. To see more valuation tips, check out this article.

Setting a price

After instructing an agent, sellers should look to setting a price that will entice credible buyers to make an offer. If you are selling a flat, research the sales prices of apartments within the same building.

You may want to consider setting your asking price in the same ballpark, as you have the advantage of comparing properties that have the exact dimensions and features as your home. For more on property price setting, check out this previous post.

Sorting your paperwork

There’s a lot of paperwork involved in the process of selling a flat. You will need everything from a proof of identity to Energy Performance Certificates and title deeds.

Additionally, leasehold flat owners will need to provide a management information pack containing leasehold information, such as the length of time remaining on the lease and details of maintenance fees.

It might be worth looking into extending your lease - you may be able to sell it for a higher price, especially if the lease has more than 80 years left before transfer to the freeholder. Read more about extending the lease on your property here.

Managing offers

Once you get viewings, and hopefully offers on your flat, you’ll need to negotiate for your next move up the property ladder. Don't be afraid to say 'no' to an offer that seems too low. In many cases, the buyer –– if they're really interested –– will come back with a higher bid.

Asking prices, guide prices, and eventual sale prices are flexible. Find out more about managing offers in this helpful guide.

What are some common issues when selling flats?

Leasehold vs freeholds

As mentioned previously, leaseholders need to think carefully about the time left on the property's lease, as it can affect the sale price. You can, for instance, try to extend the lease so it becomes a more appealing prospect to buyers.

Alternatively, if you're happy with a lower offer because you want a quick move, you can leave the lease as it is.

Solicitor fees for selling a leasehold flat

How much does it cost to sell a flat? In many cases, conveyancing costs for leasehold properties are considerably higher than freehold property transactions. You will need to pay for the solicitor to liaise with freeholders and management agents to confirm the length of the lease and any legal issues on the leaseholder's behalf. It’s for this reason that selling a leasehold property can take longer than selling a freehold.

Council tax bandings

Council tax bandings can be an issue for those looking to sell a leasehold property, especially if your flat is situated in a city centre where rates are typically higher than suburban properties.

In some instances, where you believe there has been a mistake or an inaccurate estimation, you can apply to change your council tax banding. Checking your council tax band is relevant to leaseholders because there may be a chance the property is in the wrong bracket, and you could be entitled to a lower rate. Find out more on the GOV.UK website.

Maintenance fees

These are the costs associated with maintaining communal areas and building repairs. They may include cleaning bills, security, and other services. If you’re selling a leasehold flat, ensure you gather recent maintenance invoices, so buyers can consider the extra costs before making offers on your property.

Listed buildings

In the UK, it's common for listed buildings to be converted into leasehold flats. However, building restrictions can make some buyers hesitant to buy, as they may be concerned with the costs of maintaining historic features.

Therefore, sellers of listed properties must ensure they provide information on sink funds. Sink funds refer to pools of money reserved for significant building repairs to maintain the building’s listed standards.

Many homebuyers dream of living in a listed property because of their heritage and aesthetic. That's why it's crucial to work with a knowledgeable and experienced estate agent, one who can help you position your leasehold flat in the best light to attract the ideal type of buyer.

Is it easy to sell a flat?

Leasehold flats appeal to first-time buyers, and people looking to downsize or resettle in a new area. Naturally, this makes them a popular property type that can sell incredibly quickly –– provided the seller has considered the following carefully:

Selling a flat with tenants

Selling a flat with tenants can be relatively straightforward. You can either evict them before putting your leasehold flat on the market, or let them stay. Both options have their pros and cons.

For example, it can be cheaper for the buyer for the tenants to stay living in the property, as buyers won't have to advertise for new renters. However, leasehold buyers might prefer a 'clean slate' as they intend to refurbish as soon as the sale completes.

Selling a flat with cladding

Many mortgage lenders are hesitant to take on loans for flats featuring exterior cladding due to its enhanced risk of fires. In the aftermath of the 2017 Grenfell Tower tragedy, the UK changed fire safety regulations for high rise buildings.

UK leasehold flat owners now need to ensure their building passes an ESW1 certificate before selling the property to those seeking a mortgage. So, for sellers looking to move on fast, a cash buyer or selling at auction may be your best bet if your flat contains cladding.

Can you sell a leasehold flat to a property investor?

Leasehold property transactions can incur higher costs and take longer to complete. However, from an investment perspective, buying leasehold property in an up-and-coming area can be a lucrative opportunity. Areas with great transport links and facilities for example, have no shortage of people who would rather rent than buy.

Therefore, many property investment firms in the UK (known as cash buying companies) are keen to buy leasehold flats with cladding or other properties that may pose an increased risk to conventional mortgage lenders.

It’s important to note however, that cash buying companies are not regulated by the UK’s Financial Conduct Authority (FCA). What’s more, you will never receive the full price for your property through a cash buying company, with 60-80% of its market value usually being the offered amount.

If you’re a seller, the buyer may contact your legal representative to negotiate a longer lease. You can extend the lease if they have lived in the property for at least two years. After that time, your solicitor can assign the benefit of the notice to extend. The process requires specialist valuation, so ensure that you do this through a reputed surveyor and solicitor.

Take the stress out of selling

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