It is straightforward to sell your home if it doesn’t have a lease. The problem in selling your home comes when the property has a short lease. A short lease involves having a leasehold property which means that you will own the property for several years, after which you cease to be the owner.
You are required to pay the owner of the property monthly payments for the time you occupy the property. This varies depending on the agreement between you and the property owner. Even though it is still possible to sell the property with a lease, you will face a lot of constraints, which will affect the length of your sale, as well as the price of the property, fetches in the market.
Besides, there are several avenues that you could use to sell a home with a short lease. You could try to sell your home through auctions that are usually held to connect home buyers and sellers. Also, you could consider selling your property through adverts. You only need to have a photographer take great photos of the property, after which you will contact media houses to see how much they will charge for the sale advert. Below are some of the things you need to know when it comes to selling your home with a short lease.
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Do Your Research
If you are planning to sell a property with a short lease, you need to be well informed. Do thorough research about the sale of property with short lease. Failure to do this may cause you to encounter failures which you would have avoided in the first place. You don’t want to have regrets after you have signed off the contract with the buyer since this would complicate things.
Understand what happens when you want to sell the property as well as what to expect. If possible, contact various home agencies which help prospective property sellers to find buyers. Some of these agencies may even agree to buy your leasehold property in exchange for immediate cash.
Explain to them that the property you want to sell is under a lease, and they will be able to assist where possible. They will also be able to advise you on the procedures of selling a property that has a lease. Note that most buyers avoid lease properties under 85 years, and hence, as the seller, you need to remain conscious of this fact in case you lack potential buyers soon enough.
Have you heard of the marriage value yet? Both the seller and the buyer need to understand how the marriage value works and agree to it before going any further. For lease properties, there is usually a fee that is payable to the landlord when the leased property reaches a specific number of years.
For example, you will find some places use the 80-year mark. This means that at the 80-year mark, the landlord has the right to demand half of the appreciated value of the property. A buyer is usually required to give the landlord his share without fail. It is usually accompanied by other payments, usually from additional costs, and the buyer has to offer the fee as an offer to the landlord.
This means that as the seller, you need to prepare yourself early enough to get an independent valuer to determine the real value of the property when the time comes. This ensures that you maximally benefit from the sale.
Selling a property with a lease usually has its complications. To begin with, lenders, usually banks and other societies, will not lend you money on a home or property with a short lease. If they agree to give you the money, they will require that the lease runs for at least 25 or 30 years, exceeding the end of the mortgage.
For the lenders that agree to lend on short lease property, you will find that they charge incredibly high rates for the mortgages. What this means is that if you plan on selling your property, someone who would have wanted to buy the property on a mortgage may not be able to do so.
The reason it becomes hard to get a mortgage on a short lease property is that it is perceived that the shorter the lease period, the less valuable the property becomes. The lender usually does their analysis, and the last thing they want is to lend on a short lease property only for its value to diminish quickly. Also, if you wish to remortgage, you may not be able to successfully get a mortgage on a property with a short lease, be it a house or flats.
As much as selling a property with a short lease can be complicated, you can still be able to sell your property to interested parties. You only need to understand the market and study your prospective buyers. Ensure you also understand the tips if you want to sell your property.