If you’re selling a leasehold flat with a shorter lease, the good news is that it doesn’t stop you selling. Buyers, their solicitors and their mortgage lenders will ask about the lease early on, so it pays to know your options before you go to market. With the right advice, sorting out your lease is a straightforward part of preparing to sell.
This guide explains why lease length matters when you sell, and the three main options open to you.
Why Lease Length Matters When You Sell
Every lease has a fixed term, and that term gets shorter every year. For a buyer, the years remaining affect two things: whether they can get a mortgage, and what it will cost them to extend the lease after they buy.
- Mortgage lenders: each lender sets its own minimum lease term, and these vary widely. Some look at the term remaining when the mortgage starts, others at the term left when it ends. If your lease falls below a buyer’s lender’s minimum, that buyer may not be able to proceed.
- The cost of extending: buyers know a short lease will need extending, and the shorter the lease, the more an extension generally costs. Most will factor this into their offer.
A lease is a depreciating asset, so the shorter it becomes, the more it can affect your sale. If your lease has 80 years or fewer remaining when a statutory extension is started, an additional element called marriage value forms part of the premium paid to the freeholder. If your lease is approaching 80 years, it is well worth acting sooner rather than later.
Your Options When Selling a Flat with a Short Lease
Option 1: Extend Your Lease Before You Sell
Completing your lease extension before you put the flat on the market is the simplest option. Buyers and their lenders see a longer lease, and you are not relying on finding a buyer who is willing to take on an extension.
Under the statutory route, qualifying leaseholders have the right to an additional 90 years via the Leasehold Reform, Housing and Urban Development Act 1993, with the ground rent reduced to a peppercorn. Since 31 January 2025, there is no longer a requirement to have owned your flat for two years before you can start.
The main thing to plan for is timing. You pay the premium and costs before you sell, and the extension needs to be complete before the sale goes through. For more about each stage, see our ‘How Long Will My Lease Take?’ article.
Option 2: Start the Lease Extension and Pass It to Your Buyer
If you’re ready to sell now, you can start the statutory process by serving a Section 42 notice on your freeholder, then pass the benefit of that notice to your buyer when the sale completes. Your buyer then finishes the lease extension.
This can help both sides:
- The valuation date is fixed on the date the Section 42 notice is served, so the years remaining and the value of the flat are assessed at that point.
- Your buyer does not have to wait. A new owner cannot serve their own notice until they are registered as the owner with HM Land Registry, which can take time. Taking over your notice means the process is already underway.
Getting the timing right is important, which is where specialist advice makes all the difference. The benefit of the notice can only be passed on with the lease itself, and if the flat is sold without the notice being assigned, the notice is treated as withdrawn. The assignment needs to be written into the sale contract and completed at the same time as the sale. Once a notice has been served, the leaseholder is responsible for the freeholder’s valuation and legal costs, so how these are shared should be agreed between you and your buyer as part of the sale.
Read more in our guide to assigning the benefit of a lease extension from seller to buyer.
Option 3: Sell the Flat As It Is
You can sell without extending the lease. This may suit a buyer who does not need a mortgage, or one who plans to extend after they buy. Since 31 January 2025, a buyer can start a statutory lease extension as soon as they are the registered owner, rather than waiting two years.
It’s worth bearing in mind that buyers who need a mortgage may find it harder to proceed with a short lease, and most buyers will factor the cost of extending into their offer.
Which Option Is Right for You?
The right choice depends on how many years are left on your lease, how quickly you want to sell, whether buyers for your type of property are likely to need a mortgage, and what the premium is likely to be. Every lease is different, so the best starting point is to have yours checked by a specialist. To get an idea of the cost, try our Lease Extension Calculator, or find out how the premium is worked out in our guide to lease extension valuations.
Selling a Flat with a Short Lease: FAQs
Can I sell a flat with a short lease?
Yes. There is no legal requirement to extend your lease before you sell. However, a short lease can make it harder for some buyers to get a mortgage, and buyers will usually factor the cost of extending into their offer.
Do I need to extend my lease before selling?
No, but it is worth considering. Extending first can make your flat easier to sell. If you don’t have time to complete the extension, you can serve a Section 42 notice and pass the benefit of it to your buyer when the sale completes.
Can my buyer take over my lease extension?
Yes. If you have served a Section 42 notice, the benefit of it can be assigned to your buyer, but only with the lease itself and at the same time as the sale. If the flat is sold without the notice being assigned, the notice is treated as withdrawn.
Can I extend my lease informally before I sell?
You can ask your freeholder for an informal extension, but they do not have to agree, and the terms are whatever you negotiate. The statutory route gives you a legal right to an additional 90 years and a peppercorn ground rent. Find out more in our guide on how to extend your lease.
Talk to Our Team About Selling with a Short Lease
At The Lease Extension Company, your lease extension is handled by our hand-picked panel of the country’s leading specialist lease extension solicitors, always at partner level, and surveyors who specialise in lease extension valuations. Our dedicated client service team oversees every stage, so whether you extend before you sell or start the process for your buyer to complete, you are in the best possible hands. Founded in 2017, we have helped many thousands of leaseholders successfully extend their leases, and we can advise you on the right option for your sale. Your professional legal and valuation costs are combined into a simple, money-saving fixed fee, so you know what to expect from the start. You can also see costed examples in our case studies.
To get a quote or arrange a free consultation, fill out our online form or call us on 0800 098 2770.
