Warwick Estates has revealed which regions of England and Wales are home to the least time remaining to renew when it comes to properties listed for sale with a short lease.
The market analysis looked at short lease homes listed for sale, with a short lease being anything less than 80 years, before calculating the average lease years remaining for short lease homes.
In England & Wales, the average number of remaining years for short-lease homes currently for sale is 42.2.
On a regional level, the nation’s shortest leases are found in the North West, where the average remaining years on short-lease homes currently for sale is just 17.7, while the second-shortest leases are found in Yorkshire & Humber, where short-lease homes for sale have an average of 28.8 years remaining.
The South West sits third where the average short-lease home has 36.8 years remaining, followed by London (39.5), and East Midlands (39.9).
Why buy a short-lease home? One example would be if a buy-to-let landlord is looking for a property to generate rental income from for the next few years and decades before reverting ownership back to the freeholder, short-lease homes and their relatively low asking prices can be a great investment.
Professional buyers aside, anyone who has no concerns about leaving an inheritance property behind for their children or other family members could also consider buying a short-lease property that simply has enough lease years left to see them through and no more.
Extending the lease - Short leases can, of course, be extended. In fact, leaseholders have a statutory right to extend their lease by 90 years as soon as they have lived in the home for two years. If the current owner has lived there for more than two years, a new buyer can ask them to extend the lease as a condition of purchase, perhaps even promising a higher offer if they agree, thus overcoming the issue entirely.
Mortgage woes - One significant issue with short-lease homes is that mortgage providers are often wary of lending on a property with such a short lifespan. Many mortgages are granted on the basis that it will take decades to pay off. If a home doesn’t have decades left on the lease, it creates potential complications that many lenders will choose to avoid. This is another reason why it’s always best to try and get the current owner to extend the lease as a condition of purchase, thus mitigating the lender’s concerns.
