Leasehold explained

The tenure of a property (how it is owned) in England and Wales is either freehold or leasehold. When you buy a leasehold property you own the property, for example, a flat in a larger block, but you do not own the land upon which the block is built. The land is owned by the freeholder. Some houses are leasehold, particularly in the North of England and in some new-build developments, but generally they have very long leases that start at 999 years.

You can check the tenure of your property through the land registry online, and you can download your title (or we can do this for you).

When a lease is formed the terms are set, these include the length of the lease, the ground rent, and potentially other important clauses. As the leaseholder, you will need to deal with the freeholder or the freeholders’ management company and will also generally need to pay a regular service charge which will cover buildings insurance and maintenance. The key variables to look out for when you are selling a leasehold property are the length of time remaining and the cost to renew.

All leaseholders have the legal right to renew their lease and there is government legislation in place to ensure this is done fairly. We are here to advise you about how to value your lease and estimate the cost of renewal. This advice can be critical to making the right decision about how and when to sell.

Deciding to renew a lease or sell

When deciding whether to renew a lease before selling a property you will need a professional property valuation that takes into account the current lease length and internal condition. This can then be compared with the likely value if the lease were renewed and the property brought up to best condition possible. If you are planning to renovate the property yourself you will need to also value the cost of your time as well as all materials and associated expenses.

It is vital that the property is valued with the remaining lease length factored in. Any valuation (such as from an estate agent perhaps) that does not include this is to a large degree meaningless.

A property lease is considered 'low' when it has less than 70 years remaining. Guidance is available through the government lease advisory website for properties with between 50 and 70 years left on the lease. We can help you understand the figures and what the low lease means for the sale of your property.

When a lease drops below 50 years it will, in most cases, require either a surveyor's or auctioneer's appraisal. Typically, as the lease decreases in length, the cost to renew increases exponentially and the market value of the property drops.

Properties with very low leases are likely to be adversely affected not only in terms of the capital value of the property but they can also become very difficult to sell.

The best financial outcome when selling a leasehold property

Your auction sale of a leasehold property starts with a conversation. Either call us or submit an email request and we will contact you to have an in-depth appraisal discussion. This will enable us to compile your full Property Sale Appraisal and provide you with all the information you need to make the best decision possible concerning how to proceed. The appraisal will include a professional lease extension estimate and the potential future value when the lease has been extended.

The best advice should always be to sell the property in the best possible condition with the longest length of lease, however, if you don't have the time and money to undertake the lease extension process and a full renovation, a sale by auction may be the most appropriate way to sell your property. When the cost versus reward is taken into consideration and presented as part of your precise Property Sale Appraisal, the decision can often be simplified.

An enthusiastic estate agency valuation and sales pitch may sound tempting but if the length of the lease and the condition of the property have not been fully considered it may be very difficult to sell the property.

As auctioneers, we are legally and ethically obliged to give you the best advice possible, specifically concerning the method of sale and price. This sets us apart from estate agents who look at one method – private treaty – and cannot advise on all 3 available methods.