Technically, any property with a lease of less than 80 years has a short lease. But occasionally you will see a property for sale with leases in single figures.
The plus point of these properties is that they should be priced to take into account the cost of extending a lease. A flat which should be worth £2m, but which has a very short lease estimated to cost £1.5m to extend, will be priced at around £500,000.
This scenario has risks. Until you have negotiated, you can’t be sure how much you will end up paying for your lease, and you’re unlikely to be able to raise a mortgage on a property with a very short lease. However, it does also have potential benefits.
There will be less buyer competition for this kind of property, so you may be able to negotiate a healthy price reduction.
Occasionally, buyers who only plan to be in the British capital for a few years will buy a short lease flat as a more secure alternative to renting.
And property developers sometimes target short lease properties, in order to cut their entry costs. Not only are the properties cheaper to buy, but Stamp Duty will be lower too.
Owner occupiers may take the same view, taking advantage of low entry prices to buy a home at a better address than they could otherwise afford on the assumption that future inheritances or pay rises will one day allow them to extend it.