Investors can save up to 12% on typical asking prices by grabbing short-lease properties.

A company called Open Property Group has analysed current market data on homes with a short lease of 80 years or less, seeing how much they command in the current market versus other longer-lease comparable properties, and which area has most short lease homes for sale.

A short lease can prove problematic when looking to sell a property and, should the lease expire, ownership of the property currently returns to the freeholder.

The analysis  found that the average number of years remaining on the lease of homes listed for sale today sits at just 43.3 years. However, this falls to as low as 24.8 years on average across the North West, with the East Midlands (33.1), Yorkshire and the Humber (38.7) and the South West (39.5) also home to some of the lowest number of remaining years on average.

The South East currently ranks as the nation’s short lease hotspot with 30% of the national total, followed by London (19%) and the East of England (16%).

On average a short lease home commands 12% less when compared to comparable surrounding properties – typically a difference of around £36,000. The question for investors is – can less than that sum be spent on extending the lease to increase values on resale?

Short lease flats are very difficult to mortgage if the lease is less than 80 years, and the shorter the lease, the higher the premium to extend it. 

The people being the survey say that extending a lease can cost between £5,000 to £38,000 depending on factors, including time left on the original lease and the ground rent owed.

Then there’s also lease extension valuation costs to consider, legal fees and you have to pay Section 60 costs for the freeholder too. You may even have to pay stamp duty if the extension cost climbs to more than £125,000.