If you’re thinking of buying a leasehold property in the UK, it’s important to be aware of the impact that a short lease can have on the value of the property.
A short lease is one that has less than 80 years remaining on it. Once a lease falls below 80 years, it becomes more difficult to sell, and the value of the property will start to decrease.
The amount of value that a short lease devalues a property can vary depending on a number of factors, including the location of the property, the type of property, and the remaining lease term. However, in general, a short lease can devalue a property by around 10-20%.
There are a number of reasons why a short lease can devalue a property. Firstly, it makes the property less attractive to buyers. Buyers are generally more reluctant to buy a property with a short lease, as they are concerned about the potential costs of extending the lease in the future.
Secondly, a short lease can make it more difficult to obtain a mortgage. Lenders are generally more cautious about lending on properties with short leases, as they are concerned about the risk of the buyer not being able to afford to extend the lease in the future.
Finally, a short lease can also make it more difficult to sell the property. If a buyer is interested in a property with a short lease, they will need to factor in the cost of extending the lease into their offer price. This can make it more difficult to sell the property, as buyers may be unwilling to pay the higher price.
If you’re considering buying a leasehold property with a short lease, it’s important to weigh up the risks and benefits carefully. You should also speak to a mortgage advisor to find out whether you will be able to obtain a mortgage on the property.
Here are some tips for buying a property with a short lease:
- Get professional advice from a surveyor and a conveyancing solicitor.
- Factor in the cost of extending the lease into your offer price.
- Make sure that you are happy with the terms of the lease extension.
- Be prepared to negotiate with the seller on the price of the property.
Here are some tips for selling a property with a short lease:
- Be upfront about the length of the lease in your marketing materials.
- Price the property accordingly.
- Consider extending the lease before you sell the property.
- Be prepared to negotiate with buyers on the price of the property.
I hope this blog post has been informative. If you have any further questions, please don’t hesitate to ask.