Can a short lease cost you when it comes to selling your leasehold property?

Open Property Group analysed current market data* on homes with a short lease of 80 years or less, how much they command in the current market versus other comparable properties, and which area is home to the highest concentration of short lease homes for sale.

A short lease can prove problematic when looking to sell a property and, should the lease expire, ownership of the property currently returns to the freeholder.

The government promised to shake up the ‘fleecehold sector’ by introducing the Leasehold Reform Act 2024, which provides greater power and protections to leasehold homeowners and buyers and the ability to extend short leases with greater ease and at a lower cost.

How much can a short lease on a house cost you?

The analysis shows that, on average, a short lease home will be valued -12% less when compared to comparable surrounding properties - a difference of around £36,000, on the average property price of £300,000.

Although again, this price reduction differs regionally, climbing to £52,000 in the South East, £46,000 in the East of England and £44,000 across the West Midlands.

When it comes to current short lease for sale stock, the average number of years remaining on the lease of homes listed for sale in today’s market sits at just 43.3 years. However, this falls to as low as 24.8 years on average across the North West, with the East Midlands (33.1), Yorkshire and the Humber (38.7) and the South West (39.5) also home to some of the lowest number of remaining years on average.

The South East currently ranks as the nation’s short lease hotspot when it comes to current for sale stock, accounting for 30% of the national total, followed by London (19%) and the East of England (16%).

Short lease flats

Short lease flats are very difficult to mortgage if the lease is less than 80 years, and the shorter the lease, the higher the premium to extend it.

It’s thought that the process of extending a lease can cost between £5,000 to £38,000 depending on a number of factors, including the time left on the original lease and the ground rent owed on the property.

Then there’s also lease extension valuation costs to consider, legal fees, and you may even have to pay other costs like stamp duty, if the extension cost climbs to more than £125,000.

Want to know more about lease extensions? Read our complete guide to lease extensions.

Data tables and sources

*Short lease market data sourced from PropertyData

-Wider market prices sourced from Gov UK House Price Index - May 2024 (latest available).

- Full data tables and sources can be viewed online, here