“Should I avoid buying a flat that has a short lease?”

Understanding what you’re taking on is rule number one in the property context.

As property lawyers, we help clients uncover the full facts around a house, an apartment, or a commercial building or piece of land. It means clients can make really informed decisions and, as far as possible, avoid unexpected problems, hidden costs and nasty surprises.

When it comes to buying leasehold premises (a flat in a block, for example) one of the most important considerations is the length of the lease. More specifically, the number of years still to run on the lease. It’s common for a lease term to begin at 125 years. Over time, the length of the lease decreases and with that comes some potential issues for buyers who want to agree a favourable mortgage and invest in a property that will (at least) retain its value. That’s particularly so when the lease falls below 80 years and is considered ‘short’.

What problems can short leases bring?

Banks might not lend

Many lenders are not comfortable with short leases – particularly the reduced market value a short lease causes. If the bank does decide to offer a mortgage, it may fall far short of what the buyer needs.

Re-sale might be difficult

A property with a short lease may be a less appealing option in a crowded market. Remember, too, that as the term reduces over time, so will the property’s value.

That said, you shouldn’t automatically write off a property you love just because its lease has fewer years to run than you would like. Mortgages for short-term leases are certainly available. In addition, there is the possibility of extending the lease – something that is due to become easier thanks to an anticipated change in the law. The Leasehold and Freehold Reform Act 2024 is set to make it cheaper and easier to extend a lease or buy the freehold, although it’s not yet clear when this will come into force. That, together with the likely lower cost of buying a short-lease property, could mean it’s worth giving these ‘less attractive’ options some thought.

Don’t jump in without specialist advice, however. It’s vital to speak with professionals who will assess the risks, talk through the practicalities and help you make the decision that’s right for you. Contact us for advice on your potential purchase on info@bsandi.co.uk or call on 01264 353411.