Short leases continue to derail property transactions, despite ongoing reform efforts. Roshan Sivapalan considers why they still matter, how they affect transactions and how conveyancers can identify and manage risk to protect both clients and transactions
Roshan Sivapalan MRICS is a RICS-registered valuer and director of Blakes Chartered Surveyors and Extension.Lease, working closely with Arcadia Law
Lender criteria: minimum unexpired term requirements Most mainstream lenders impose minimum unexpired term requirements, usually expressed as:
Despite sustained political focus on leasehold reform and repeated headlines predicting the end of what are often described as ‘feudal’ leasehold practices,
short residential leases and those with onerous ground rents continue to cause diϞculty in property transactions. For conveyancers acting on sales, purchases and remortgages, lease length remains one of the most common and underestimated factors affecting marketability, valuation and lender appetite.
Short leases are rarely just a legal issue. They sit at the intersection of valuation methodology, lender policy and market perception, requiring conveyancers to manage not only legal mechanics but also client expectations around cost, timing
and risk. Where this is not addressed early, even technically straightforward transactions can become commercially unviable.
While reform proposals within the Leasehold and Freehold Reform Act 2024 have raised expectations that lease extensions will become simpler and cheaper, the current legal framework and valuation methodology remain largely in force, save for a limited number of commenced provisions such as the removal of the two-year ownership requirement. Conveyancers must therefore continue to navigate short leases under existing legislation, while also managing client expectations during a period of legislative uncertainty.
What is a ‘short lease’ in practice?
There is no single definition of a short lease. Instead, different thresholds apply depending on the perspective of lenders, valuers, buyers and freeholders. Understanding these distinctions is essential to managing transactional risk and advising clients appropriately.
80-year threshold and marriage value
Under current legislation, once a lease falls below 80 years unexpired, marriage value becomes payable on a statutory lease extension. Marriage value reflects the additional value created when the leaseholder’s and freeholder’s interests are combined on extension and is shared equally between them.
The impact of marriage value is frequently misunderstood. Premiums do not increase incrementally once 80 years is crossed; in many cases, they rise disproportionately. For leaseholders who delay taking advice, the financial consequences can therefore be significant. From a conveyancing standpoint, leases approaching 80 years should be treated as time-sensitive even where they remain mortgageable. Failure to flag the issue early can materially affect price negotiations, affordability assessments and overall transaction viability.
through valuation assumptions for enfranchisement purposes, underlining the current complexity and transitional uncertainty for practitioners. Many problematic ground rent clauses therefore remain embedded within the existing leasehold housing stock.
Conveyancers should assess lease length and ground rent provisions together rather than treating them as separate considerations.
Removal of historic forfeiture risk
Until recently, long residential leases carrying higher ground rents presented an additional, often overlooked, risk. Where ground rent exceeded 4250 per annum (or 41,000 within Greater London), there was a theoretical risk that the lease could fall within the assured tenancy regime under the Housing Act 1988. This raised the possibility, however remote in practice, that a long lease could be treated as an assured shorthold tenancy, exposing the leaseholder to mandatory possession proceedings for relatively modest arrears under section 8 of the act.
This caused concern for lenders and practitioners, particularly in transactions involving escalating ground rent clauses. While forfeiture in such circumstances was rarely pursued, the risk contributed to lender caution and transactional uncertainty.
The Renters’ Rights Act 2025, part of which was implemented on 27 December 2025, has removed this anomaly. Long residential leases granted for a term exceeding 21 years are now excluded from the assured tenancy regime, regardless of ground rent level. For conveyancers, this provides clarity and removes
a strand of risk from leasehold transactions, although ground rent levels must still be considered carefully from a valuation and lending perspective.
Cautious optimism amid ongoing uncertainty
Leasehold reform has the potential to reshape the treatment of short leases. However, uncertainty remains around both timing and implementation.
Proposals to remove marriage value have generated understandable interest among leaseholders, many of whom have waited years for favourable reform. However, the precise legislative mechanism, transitional arrangements and valuation methodology are not yet settled. Consultation continues around the prescription of yield rates for valuation purposes, which could materially affect premiums depending on their final form.
At the same time, government attention appears divided, with work progressing on a draft Commonhold Bill and other housing priorities competing for legislative time, including proposals to cap existing ground rents at 4250 per annum and reduce them to a peppercorn after 40 years. However, these controversial measures remain subject to consultation and
the full parliamentary process, with implementation quoted by government as being potentially in late 2028.
For conveyancers, the practical reality is that current law largely continues to apply. The draft bill’s ground rent proposals further illustrate that reform is still evolving, and advisers should be cautious about assuming outcomes until legislation is finalised and commenced. Clients should be advised against delaying action purely in anticipation of reform, particularly where transactions, refinancing or time-critical decisions are involved.
Assigning section 42 notices
Where a voluntary lease extension cannot be agreed on reasonable terms, the service and assignment of a section 42 notice can provide a practical alternative, allowing a buyer to continue a statutory lease extension following completion. Such claims typically take six to 12 months from initiation to completion.
● a minimum term at completion (commonly between 70 and 85 years); and
● a minimum term remaining at the end of the mortgage.
These criteria vary widely between lenders and may also be influenced by valuers’ comments. A lease acceptable to one lender may be rejected by another even where the difference in unexpired term is marginal. This lack of consistency causes diϞculty where issues are identified late, particularly in chain transactions or where buyers change lender mid-transaction.
Market perception: below 85 to 90 years
In practice, market sensitivity often arises well before the statutory 80-year threshold, particularly where buyers are advised to factor in future extension costs. Once a lease falls below 85 to 90 years, marketability can become a concern. Valuations may be affected, extension premiums rise sharply below 80 years, and buyer caution, including among cash purchasers, becomes more common, often leading to price adjustments to reflect the perceived cost, inconvenience and risk of lease renewal. At this stage, lease length may become the dominant transactional issue, eclipsing other property attributes.
Conveyancers may find that negotiations focus almost entirely on extension strategy, timing and cost, particularly where the issue was not identified at the time of sale agreement.
Ground rents: still relevant, still problematic
While lease length often receives the greatest attention, ground rent provisions continue to influence both lending decisions and valuation outcomes. Recent developments reinforce that ground rent remains a live issue. The government’s draft Commonhold and Leasehold Reform Bill, published at the end of January, proposes that ground rents in existing long residential leases may be capped at 4250 per annum, reducing to a peppercorn after 40 years. While still only a bill and subject to consultation and parliamentary scrutiny, the proposal highlights the direction of travel and the continuing policy focus on ground rent burdens.
Ground rents that double at regular intervals, particularly where reviews occur more frequently than every 25 years, or that escalate aggressively can render properties unmortgageable
or materially depress value even where the unexpired term appears adequate. Many lenders apply strict caps on acceptable ground rent levels or escalation patterns, and failure to identify problematic clauses early can result in late-stage refusals or revised lending terms.
Although the Leasehold Reform (Ground Rent) Act 2022 restricts ground rents on new long residential leases and term extensions, historic leases remain unaffected. This contrasts with the Leasehold and Freehold Reform Act 2024, which (once implemented) seeks to address existing ground rents indirectly
The abolition of the two-year ownership requirement, with effect from 31 January 2025, under the Leasehold and Freehold Reform Act 2024 has reduced reliance on notice assignment.
Buyers can now initiate a statutory lease extension once registered as proprietor, removing a previous transactional constraint, although practitioners should be aware of the registration gap post-completion and consider expediting with HM Land Registry where necessary.
Informal lease extensions
Informal lease extensions are sometimes proposed to maintain momentum. While attractive in the short term, they can carry long-term risk, including unfavourable revised lease terms or the retention of onerous escalating ground rents until expiry of the existing term, given that the Leasehold Reform (Ground Rent) Act 2022 only restricts rent on the extended element. Such proposals should be approached cautiously and subjected to scrutiny, with valuation advice obtained before agreement.
Actions for conveyancers on leasehold transactions
Short leases are most effectively managed when risks are identified early. Key points to consider include the following:
1. Confirm the unexpired lease term at the outset. Review lease length at memorandum stage. Leases under approximately 85 to 90 years should be flagged immediately.
2. Assess lender acceptability early. Check the unexpired term against likely lender criteria, including requirements at completion and mortgage expiry.
3. Review ground rent provisions carefully. Identify doubling or aggressively escalating rents that may affect mortgageability or value.
4. Advise clearly on the 80-year threshold. Ensure clients
understand marriage value and the cost consequences of delay.
5. Consider whether a statutory lease extension is required. Assess whether extension should be completed prior to sale or initiated post-completion.
6. Be cautious with informal lease extensions. Scrutinise revised
terms carefully and recommend valuation advice.
7. Manage expectations around leasehold reform. Avoid ‘wait and see’ advice based solely on proposed reform; ground advice in current law and transaction objectives.
Managing short lease and ground rent risk
Early identification, clear communication and proactive coordination with valuation professionals remain the most effective ways to manage short-lease risk.
Conveyancers play a central role in ensuring clients understand not only the legal position but also the practical and financial implications of short leases and onerous ground rents. In an evolving legislative landscape, cautious, well-informed advice remains essential.
Conclusion
Short leases remain one of the most persistent and consequential issues in residential conveyancing. While leasehold reform may bring meaningful change in time, uncertainty around timing, scope and implementation means existing law continues to govern transactions.
By engaging proactively with lease length, ground rent provisions and extension options, conveyancers can protect clients, preserve transactions and reduce the likelihood of avoidable delay or fall-throughs.
