A leasehold flat with eighty-five years remaining is an ordinary asset. The same flat with seventy-eight years remaining is a considerably more awkward one — harder to mortgage, harder to sell, and more expensive to put right with every year that passes.
The problem is circular, and that is what makes it stressful. Extending the lease restores the property’s value and mortgageability, but the premium has to be paid before that happens, and most lenders will not advance money against a flat whose lease is the very reason they consider it poor security.
Why 80 Years Is the Number That Matters
Below eighty years unexpired, the calculation of your extension premium changes. An additional element known as marriage value comes into play, and the leaseholder is generally required to pay half of the uplift in value that the extension creates. In practical terms, the cost of extending can rise sharply once that threshold is crossed.
This produces an uncomfortable dynamic. The longer you wait, the more expensive the remedy becomes, and the harder the property is to finance in the meantime. Waiting is almost never the cheaper option.
Separately, most mainstream mortgage lenders want a minimum unexpired term at the point the loan completes — commonly around seventy years, though criteria vary. Fall below that and the pool of available lenders narrows considerably, which affects both your ability to refinance and any buyer’s ability to purchase.
Where the Money Usually Comes From
There are four realistic routes, and which one suits you depends less on preference than on the numbers.
Savings. Cheapest by a distance if the premium is modest and the funds are available. Worth exhausting first.
A further advance from your existing lender. Some will consider it, particularly if the extension demonstrably improves their security. Many will not, precisely because the short lease is what concerns them. Worth asking, but do not build your timetable around it.
Remortgaging on completion of the extension. Elegant in theory: the new, longer lease supports a better mortgage, which funds the premium. In practice it requires a lender willing to lend on the pre-extension title and release funds simultaneously, which is a narrower field than it sounds.
Short-term secured lending. Funds the premium now, secured against the flat or against another property you own, and is repaid once the extension completes and a conventional mortgage becomes available. Facilities are typically arranged over one to eighteen months, with interest rolled up and settled on repayment rather than serviced monthly.
That fourth route is what most people end up using where the lease has already fallen below the mortgageable threshold. Our bridging loans pillar covers how these facilities work generally, and our short-term bridging loans page sets out typical terms.
Borrowing Against a Different Property Instead
If the flat itself is difficult security, an often-overlooked option is to secure the borrowing against another property you own — a buy-to-let, a second home, or a property with substantial equity and a mortgage you would rather not disturb.
This sidesteps the problem entirely. The lender is taking security over an asset with no lease issue, so their appetite is quite different, and pricing usually reflects that. Where there is an existing mortgage in place, the borrowing can sit behind it as an additional charge rather than replacing it. Our page on second charge bridging explains that structure.
What It Costs, Realistically
Three costs sit alongside the premium itself, and people routinely underestimate all of them.
Professional fees. You are generally responsible for the freeholder’s reasonable valuation and legal costs as well as your own. Budget for this properly at the outset.
Valuation. Lease extension valuation is a specialism, and the premium is genuinely negotiable within a range. A good valuer earns their fee several times over. Note that a lender’s valuation serves a different purpose from a premium valuation — our guide to property valuation in short-term finance explains the distinction.
Finance costs. Arrangement fees typically run at one to two per cent of the facility, with legal costs on top. Against a premium running into six figures, these are material but usually modest relative to the value the extension restores.
London Flats and the Concentration of the Problem
Short-lease flats are disproportionately a London issue, simply because so much of the capital’s housing stock is leasehold and much of it was granted on long leases decades ago that are now maturing. Prime central London in particular contains a great deal of stock where the lease is the single largest factor in the property’s value.
If your flat is in London, our London bridging finance page covers lender appetite for leasehold security across the capital, including flats with fewer than seventy years remaining.
Frequently Asked Questions
Can I get finance on a flat with fewer than seventy years left on the lease?
Often yes, through specialist rather than mainstream lenders, though usually at a lower loan-to-value and sometimes on condition that the lease extension is completed as part of the transaction. Below around fifty years the field narrows considerably.
Is it better to extend before selling, or let the buyer deal with it?
Usually before, if you can fund it. Buyers discount heavily for a short lease — typically by more than the extension costs — and the property appeals to a far wider pool of purchasers once the lease is long.
How long does a statutory lease extension take?
Commonly six to twelve months from serving notice, though it can run longer where the premium is disputed. Finance should be arranged with that timescale in mind rather than an optimistic one.
Do I qualify to extend the lease at all?
The statutory route generally requires that you have owned the flat for at least two years. Where you have owned it for less, an informal negotiation with the freeholder may still be possible, though on terms of their choosing.
Lease extension funding sits awkwardly between conventional mortgage lending and specialist finance, which is exactly why it is worth speaking to a broker who arranges both. You can see the full range of what we do on our homepage, or contact our team to discuss your lease and what is achievable.