It’s been calculated that landlord flat owners trying to sell with a short lease face a price hit of very nearly £50,000.
House Buyer Bureau analysed current market listings of short lease flats across England and compared their asking prices with the latest average price for a ‘regular’ flat.
The definition of a short lease for this exercise was 60 years or less.
Unlike many factors that influence property values, a short lease doesn’t just reduce the price a seller can expect to achieve, it can also make a property considerably harder to sell.
Many mortgage lenders impose minimum lease requirements, meaning the shorter the lease, the smaller the pool of buyers able to proceed.
Those who remain are also likely to factor the future cost of extending the lease into any offer they make.
Across England, the average short lease flat is currently listed for £170,201, compared with a wider average flat price of £218,451. This marks a short lease shortfall of -22.1%, or £48,250.
The biggest price gap is found in Yorkshire and the Humber, where short lease flats are marketed at an average of £82,675, some 35.2% below the regional average flat price of £127,668.
The North East follows with a discount of 32.7%, while sellers in the East of England and West Midlands are typically marketing their flats for 30.7% and 30.1% less than the regional average respectively.
At the other end of the scale, London records the smallest discount.
Despite having one of the largest numbers of short lease flats currently on the market, the average asking price is 11% below the wider flat market, reflecting the capital’s stronger demand for apartment living.
While qualifying leaseholders have the legal right to extend their lease, the cost typically exceeds £12,500 for leases approaching 100 years remaining and can rise to more than £33,000 where fewer than 60 years remain.
This leaves sellers with a difficult choice between paying thousands of pounds to improve the property’s marketability or accepting a substantial discount to secure a sale.
A House Buyer Bureau says: “One of the biggest misconceptions is that a short lease only affects the value of your flat. In reality, it can affect whether you’re able to sell it at all.
“The longer a lease is left, the more expensive it usually becomes to extend, while at the same time attracting fewer buyers.”
This article is taken from Landlord Today