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Thomas
Thomas, Solicitor
Category: Property Law
Satisfied Customers: 7618
Experience:  UK solicitor holding an England and Wales practising Certificate.
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Can you make a profit when selling your leasehold property

Customer Question

Can you make a profit when selling your leasehold property
Submitted: 4 years ago.
Category: Property Law
Expert:  Thomas replied 4 years ago.
Hi,

Can you explain your situation a little more please?

What are the details of the lease that you wish to sell?

Is this residential or commercial property?

Tom
Customer: replied 4 years ago.
Hi graham. I'm a young man just trying to further my knowledge. It's regarding residential property. Just trying to see the pros in a leasehold mortgage. Some have described it as 'long term renting'. Any information would be terrific. Thank you.
Expert:  Thomas replied 4 years ago.
Hi

Thanks for your patience.

If you purchase a long-lease (ie. one which was originally granted for 125 years) then it’s not quite like long term renting.

Provided that the length of the term of lease is longer than 60-70 years it does not affect the value of the property. Once you get below this length of term then mortgage companys may not issue mortgage offers to buyers with this shortish term remaining.

Therefore, it becomes necessary to extend it, which tenants have rights to compel the freeholders to do and if they do not or attempt to charge an unreasonable fee then you can refer the matter to the leasehold valuation tribunal for determination.

A lease, like anything, is worth what a buyer is willing to pay for it so it’s certainly capable of making a profit.

The cons would be that if the property is in a large block then there may be considerable service charges to pay to the managing company or freeholder who maintain the common parts. They may also require you to become a part of the management committee for the common parts and this can be a hassle. Additioanlly, there can be quite restrictive covenants in leases regarding sub-letting, pets and things of that nature.

If the term of the lease is likely to get below 70 years during your period of ownership then I would only proceed if you are satisfied you will be easily able to extend it.

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Kind regards,


Tom
Thomas and other Property Law Specialists are ready to help you
Customer: replied 4 years ago.
Just to thank you.
Expert:  Thomas replied 4 years ago.
No problem.

Thanks for rating my answer.

Tom