1 July 2025

Selling a property with a short lease

By Stephanie Connor, Associate Solicitor, Hayes + Storr.

If you own a leasehold property, you own the right to occupy it for a fixed number of years – not the property itself. As the lease shortens, it becomes a depreciating asset, which can cause complications when selling.

Why Short Leases Matter

There’s no fixed definition of a “short” lease, but generally, issues begin when the lease has 90 years or fewer remaining. Below 80 years, extending the lease becomes significantly more expensive due to the addition of “marriage value” – the increase in property value resulting from the extension. Mortgage lenders may also decline to lend if the lease is under a certain threshold, often between 70 and 85 years. These factors reduce buyer interest and may lower the sale price.

Mortgage Lender Restrictions

Most mainstream mortgage providers require a minimum lease term, making it harder for buyers to secure finance on short leases. This limits your pool of potential buyers and can affect both demand and price. Ensuring your estate agent is aware of the lease term and properly vets buyers can help avoid delays or failed sales.

Extending Your Lease

You may have a legal right to extend your lease – by 50 years for a house or 90 years for a flat. This can be done at any time after your purchase. The cost depends on ground rent, remaining lease term, and, if below 80 years, marriage value. Independent valuation and advice from an experienced solicitor are essential.

Extending the lease can take 3 to 12 months, depending on whether you pursue the statutory route or negotiate a voluntary extension with your landlord. Voluntary extensions can be quicker but may offer less favourable terms, so legal advice is crucial to ensure your interests are protected.

Other Selling Options

You can sell without extending the lease, but the price may be lower. A professional valuation will help you assess whether this is a viable option. In some cases – particularly with very short leases, auctioning the property may be appropriate.

Recent Legal Changes

The Leasehold and Freehold Reform Act 2024 introduces major improvements for leaseholders, although most of the Act is not in force yet. From 31 January 2025 you no longer need to wait two years to apply for a statutory lease extension. In the future, once other parts of the Act are in force, marriage value is to be abolished – potentially making lease extensions significantly cheaper.

The Act also proposes to significantly increase the standard lease extension terms, raising them from 50 years to 990 years for houses, and from 90 years to 990 years for flats.

Due to the complexity of the reforms, delays, including the extended lease terms, require secondary legislation to come into effect which are expected to come into force late 2025 or early 2026.

If your lease has less than 80 years remaining, it may be worth considering whether to delay your sale until the new law is in effect.

How We Can Help

Our team is experienced in leasehold law and can guide you through the conveyancing process. For tailored advice, please contact Stephanie Connor at Hayes + Storr Solicitors on 01263 712835 or email: stephanie.connor@hayes-storr.com.

This article is for general information only and does not constitute legal advice. The law may have changed since publication.

 

 

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