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Short Leases…

... and What To Do About Them

At almost every property networking meeting I attend, a leasehold investor will ask for my help with “a short lease”. But short leases do not really exist – they are long leases which have been worn away by the passing of time. For example, a Lease with a term of 99 years from 25th March 1985 ... will now be in 'short lease' territory.

If you're concerned about a leasehold house .....

Lease Extension Flowchart

Click to download a full-size copy

As leaseholders often find it difficult to work out what information they need to extract from their lease, we've created a Lease Extension Flowchart. If you would like a copy - there's no charge - just click this link.

By starting at the top and answering the questions one by one, you can find the information which is needed whatever type of lease you have.

Sellers often see a ‘short lease’ as a problem - actually it’s normally their estate agent who sees it as a problem. This is because the flat may have become un-mortgage-able; particularly when getting down to 70 years or so unexpired. Banks and building societies don’t like lending on a depreciating asset – and a Lease depreciates faster every year; 1/99th, 1/98th, 1/97th ... 1/20th, 1/19th, 1/18th, ... etc. Consequently sellers reduce the asking price of the flat – and that provides an opportunity for you!

Under the correct circumstances, you have a statutory right to force your landlord, the Freeholder, to extend the Lease by 90 years – in addition to the original term. AND the Ground Rent is reduced to a peppercorn. Admittedly the process of extending the Lease costs time and money, but the time and money is usually far less than the drop in asking price given away by the seller. That means you can utilise your superior knowledge to enhance your profit and the capital value of your investment.

So what information do you need to find out in order to deal with a ‘short lease’? As a minimum the following:

So what information do you need to find out in order to deal with a ‘short lease’?

As a minimum, you need the following:

  • The original term and date of the Lease; e.g. 99 years from 25thMarch 1985
  • The original Ground Rent; e.g. £50 per annum
  • The Ground Rent review dates and reviewed amounts payable; e.g. £100pa from 25th March 2018 … and £150pa from 25th March 2051
  • The value of the flat with its current ‘short Lease’; e.g. £100,000
  • The anticipated value of the flat with an extended Lease; e.g. £115,000

With this information to hand you can approach an expert in the field of Lease Extensions, who will be able to calculate the ‘value’ of the lease extension.

In the above example this might be between £4,500 and £6,000 ... plus costs.

So, if the value of the flat with an extended Lease is £15,000 more than the same flat with a ‘short Lease’, you can more than double your money by going through the process!

But there are some other things to bear in mind:

  • The Leaseholder’s Notice
  • Costs
  • Valuer & Solicitor
  • Do You Qualify?
  • Marriage Value

The Leaseholder’s Notice

To acquire a Lease Extension you will need to serve Notice upon the Landlord. This Notice must be in the prescribed form and must contain no inaccuracies or misdescriptions, as an incomplete Notice can be rejected as invalid by the Landlord – by means of a Counter-Notice. Serving the Notice fixes the ‘valuation date’ and triggers a set of procedures for both parties to follow.


From the date the Landlord receives the Notice, you – the Leaseholder - will be responsible for the Landlord’s “reasonable costs”. These costs will include his legal and valuation expenses. You’ll also have your own valuer and solicitor to pay for, so do factor these numbers into your situation when assessing the value of the project.

Valuer and Solicitor

Dealing with a Lease Extension is a specialist exercise. I would therefore recommend using a valuer and a solicitor who are used to handling such matters.

Do You Qualify?

There are a number of factors affecting whether a Leaseholder qualifies for a Lease Extension. The main one to worry about is you must have owned the flat for two years. If you’re buying a flat with a ‘short Lease’ it is therefore imperative that you reach agreement with the seller and arrange for the seller to serve Notice ... and then assign the benefit to you. Make sure you control the process – otherwise the seller may quote a higher ‘premium’ than you would like to pay.

Marriage Value

Marriage Value is, in short, the increase in value of the flat created by the extension process – and comprises a combination of the Landlord’s interest in the property and the Leaseholder’s interest in the property. There’s no need to explain the detail here but there is one very important fact for you to have in mind.

For Leases having more than 80 years unexpired, the law states that marriage value is ignored in the valuation process. For Leases having less than 80 years unexpired marriage value IS taken into account – increasing the premium payable for the Lease extension. Therefore make sure you serve Notice BEFORE you reach the 80 year point wherever possible.

Get Help Now!

Bernie Wales can provide an informal indicative valuation of the premium which will be required to extend your ’short lease’ and advise on how to negotiate with the freeholder / flat owner / estate agent … and a recommendation for a specialist solicitor and/or valuer, if required. All you need to do is book a slot here >

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