There is no set rule about the length of a lease that is too short to sell.
But when a lease falls below 80 years, the cost of extending it increases dramatically, making it harder to sell.
Mortgage lenders, generally, will not lend on properties with a lease that is shorter than the mortgage. For example, it is difficult to find lenders who would provide a 25-year mortgage to buy a property that has just 20 years left on the lease.
Ultimately, deciding whether your lease is too short and if you should extend it depends on your personal circumstances and your intentions about selling your property.
It can be a complicated decision. This is how two leaseholders handled their situation.
Case study: Belinda
Belinda Jones was looking to sell her flat to move in with her daughter. Her lease had 60 years to run. She finally found a buyer who was interested in the property, but was reluctant because of the lease years.
Belinda did not have the finances to extend her lease and was worried that she would never be able to sell the flat.
LEASE advised Belinda to consider starting the legal process for extending the lease with a view to transferring it to her buyer. All she needed to do was get the ball rolling on the lease extension, and the buyer could take over from there after buying the property.
In this win-win situation, Belinda could sell the house with the buyer paying the premium for the lease extension. Meanwhile, the buyer would not have to wait until after buying the property to start the process.
Belinda’s estate agents helped her to negotiate a reduction in the sale price to reflect the shorter lease.
Case study: Claire
For Claire Smith the length of the lease was an important consideration when looking to buy a flat with 50 years remaining on the lease.
She was not planning to stay in the area for more than 5 years, so the ability to resell was crucial.
Claire checked the cost of a lease extension on the LEASE calculator.
The estimated price was much higher than she was prepared to pay, so she made an informed decision not to buy the flat.
More information you might find useful:
- Should I wait to extend my lease? I have heard that planned changes could make lease extension cheaper.
- Can I buy a flat and extend the lease at the same time?
- Lease Extension – Getting Started: advice guide
- Freehold vs leasehold conveyancing: flowchart
- More Frequently Asked Questions on Buying and Selling
Still not found the answer?
Contact LEASE to have your enquiry dealt with by one of our experienced advisers