Getting a Mortgage for a Short Lease Property in the UK

If you buy a flat it will either be Freehold or Leasehold.

If it is leasehold then the freeholder will own the ground on which the block of flats stands.

You just buy the right to live in the building for a set number of years – the number that the lease has to run – and at the end of the lease, ownership of the property reverts to the freeholder.

To live there you pay the landlord a ground rent, as well as a service charge to manage any communal areas inside and outside the building. Details of these will be laid out in the lease for the property.

The longer the lease the more keen lenders will be to offer you a mortgage. If a lease is below 70 years in length, the value is diminished and it becomes a wasting asset.


Usually Lenders will set a Minimum Lease Length

…from either the beginning or the end of the mortgage term. Most lenders ask that it runs at least 30 years after the end of the mortgage term.

If there is less than 25 years left on the lease at the end of the mortgage it is very difficult to get a loan unless the property is in a very desirable area. Homes in Mayfair, for example, traditionally have very short leases.

If you own a flat in a leasehold block and it goes below 70 years it is a good idea to get legal advice about extending the lease. Although this will set you back a few thousand pounds, it will add value to the property and make it easier to sell.

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