A London estate agency is attempting to help leaseholders with short leases who may be finding it hard to raise funds through the value of their properties.
STANLEY Chelsea, in association with Market Harborough Building Society, has launched a service called Short Lease Solutions.
The mortgage-free leaseholder can sell the lease back to their freeholder at the market rate for the remaining lease length and receives a five-year non-assignable low rent tenancy, renewable for a second five-year period if required.
The leaseholder receives 50 per cent of the purchase price on completion and the 50 per cent balance when leaving the property.
The agency says the leaseholder’s rent is fixed low so the freeholder’s monthly interest charge is ”easily covered by the released cash.”
It adds that the advantage to the leaseholder is that the sale price is fixed and avoids further decline as the lease shortens.
At the same time the leaseholder remains in the property and becomes a low-rent-paying tenant with time to plan departure. They are also no longer responsible for the service charges.
The freeholder benefits from an earlier acquisition of the property with minimal outlay.
The agency adds: “Older leaseholders in particular, with fewer years remaining on their lease, find it almost impossible to raise money to meet service charges and increasing health care needs without selling and moving out. Most are keen to stay in their homes until they are ready to move. Buying a lease extension via equity release is complicated, expensive and pointless if the intention is to move out in the next few years.”