A flat with a short lease often carries a tempting price, and for good reason. The shorter the lease, the more it costs to put right, and the fussier mortgage lenders become. Bought wisely, a short-lease flat can be a bargain. Bought blind, it can be a money pit.
What counts as short
Leases start long, but they shrink by a year for every year that passes. Once the remaining term slips below eighty years, the cost of extending jumps because of an extra payment called marriage value. Below sixty years, many lenders will not offer a mortgage at all, which shrinks your future buyer pool sharply.
The right to extend
Leaseholders generally have a legal right to extend, adding decades to the term and reducing the ground rent. Recent reforms have made the process fairer and the extension longer, but it still involves a valuation, legal fees and a premium paid to the freeholder. The longer you leave it, the more that premium grows.
Doing the maths
- Get an extension quote before you offer, not after
- Add it to the price to see the true cost of the flat
- Check lender criteria some need a minimum term remaining
A strategy that can pay off
Some buyers negotiate for the seller to start the extension before completion, then assign the right to them, so the new long lease is in place soon after they move in. It takes coordination between both solicitors, but it removes the uncertainty. Whatever route you take, treat the lease length as a price, not a footnote, and the short-lease flat can be a shrewd buy rather than a trap.