If you’re thinking about buying or selling a leasehold flat with a short lease — typically considered under 100 years — it’s essential to understand the risks, limitations, and options available to you. A short lease affects the property’s market value, mortgageability, buyer interest, and the process of transferring ownership.
But there are strategic solutions, including serving a Section 42 notice and assigning its benefit to a buyer, or negotiating a statutory lease extension ahead of sale.
This guide explains the challenges of short lease transactions and how to manage them effectively.
What Is a Short Lease?
A short lease is generally defined as having less than 80 to 100 years remaining. Below this threshold:
- Marriage value applies (below 80), making lease extensions more expensive
- Many lenders won’t approve mortgages
- Property value begins to drop significantly
Why Short Leases Are Problematic
1. Reduced Market Value
- Buyers offer less due to future extension costs
- Properties with 70–80 years remaining can lose 10–20% of market value
2. Difficulty Getting a Mortgage
- Most lenders require 85+ years
- Short lease properties may only appeal to cash buyers
3. Higher Lease Extension Premiums
- When the term drops below 80 years, marriage value becomes payable to the freeholder
- Premiums increase significantly — by thousands of pounds
4. Buyer Uncertainty
- Solicitors may advise buyers to avoid short leases
- Delays or failed sales due to concerns over cost or eligibility
Selling a Property with a Short Lease
If you’re selling, you have three main options:
✅ Option 1: Extend the Lease Before Selling
- Increases the value of your property
- Attracts more buyers and wider mortgage access
- Reduces buyer risk
Requires 6–12 months for a full statutory extension — best started early.
✅ Option 2: Serve a Section 42 Notice and Assign It
If you’re short on time:
- Instruct a surveyor to value the premium
- Serve the formal Section 42 Tenant’s Notice (statutory process)
- Assign the benefit of the notice to the buyer
This enables the buyer to:
- Proceed with lease extension after completion
- Avoid the 2-year ownership requirement (now abolished, but still may help with timing coordination)
✅ Option 3: Sell As-Is (At a Discount)
- Some buyers may be willing to take on the lease extension themselves
- Often means selling at below market value
- May limit interest to cash buyers
Buying a Property with a Short Lease
If you’re a buyer:
- Check the lease term carefully (ask your solicitor)
- Find out whether a Section 42 notice has already been served
- Consider making your offer subject to lease extension
- Get a lease extension valuation early
Be prepared to:
- Negotiate a lower purchase price
- Fund a lease extension soon after completion
- Work with lenders that allow short leases, if mortgaging
How Does a Section 42 Notice Help?
Under the 1993 Act, leaseholders can serve a Section 42 notice to start the lease extension process. Once served:
- The notice can be assigned to the buyer as part of the sale
- The buyer can complete the extension without owning the flat for 2 years
- Offers flexibility and preserves the value of the flat
Even though the 2-year ownership rule has been abolished (as of 31 January 2025), assigning the notice still has advantages:
- The clock starts ticking on the statutory process
- Buyers can secure the extension sooner after purchase
Example: Selling with a Short Lease
- Flat has 77 years remaining
- Owner serves Section 42 notice
- Buyer agrees to purchase and take on the lease extension
- Buyer’s solicitor uses notice assignment to proceed post-completion
Result: Buyer extends lease sooner after purchase.
FAQs
Can I sell with a short lease?
Yes — but expect lower offers and potential buyer hesitancy. Serving a notice improves the situation but extending it prior to sale solves it.
Can the buyer extend the lease immediately?
Yes — if you’ve served a Section 42 notice and assign it at completion.
Will mortgage lenders accept a short lease?
Most won’t if it’s under 80 to 85 years at application. Some specialist lenders may, but rates can be higher.
Should I extend first or assign the notice?
If time and funds allow, extending first usually gives you the highest sale price. If not, serve the notice and assign it.
Summary: Buying and Selling with a Short Lease
| Role | Strategy |
| Seller | Extend before sale, or serve and assign notice |
| Buyer | Confirm lease term, check notice status, budget or negotiate for extension |
| Both | Use expert surveyors and solicitors familiar with short lease issues |
Need Help Managing a Short Lease Sale or Purchase?
At Extension.Lease, we:
- Provide expert lease extension valuations
- Guide sellers on premium strategies
- Help buyers assess short lease risks
- Work closely with your solicitor to streamline the process
