If you’re searching for property in England or Wales, the chances are good that you’ve already come across some with prices that seem too good to be true. Why is that? Well, it’s highly likely that the property in question has a short lease. This article explores what you need to think about if you are buying a short leasehold property.
What is a leasehold property?
With leasehold property, you own a lease over part of the building. The lease is granted to you by the landlord (the freeholder) who is the person who owns the building and the land the building sits on. You will have a lease agreement that grants you the right to use and occupy the demised premises (your apartment) for a specific period of time.
If you want to find out more about buying a lease hold property, read more about leasehold property here.
What is a short leasehold?
Short leasehold properties are those that have a lease that expires within a relatively short period, usually less than 80 years. While this type of property can offer some advantages, there are also some potential drawbacks that should be taken into consideration.
Can you extend the lease?
It is possible to extend the lease. However, it is not always straight forward. If you are thinking about buying a short leasehold property you should read our guide to extending a lease here
Advantages of buying a short leasehold property
The primary advantage of buying a property with a short lease term remaining is cost. Leases are wasting assets therefore the less time remaining on the property the lower its value. Whilst it is possible to extend the lease it is not always straight forward.
You should also be aware it can be very difficult to obtain a mortgage on a property with a lease term remaining less than 80 years.
Is buying a short leasehold worth it?
The solution to this topic, as with just much everything else related to property, rests squarely with the person. Some people will have no other choice, while others will find a short-term rental property to be more bother than it’s worth.
But one thing is certain: short lease properties might be advantageous in the long run, but you need to be ready for a few challenges in the short term before you notice any benefits.
Are you thinking about buying an investment property?
We built Du Val Global, real estate investment software designed to help investors make better investment decisions when they buy property. Our platform provides investors with the real estate investment tools to help with critical decision-making, including
Research – access to powerful property analysis provides real-time market research, allowing
landlords to have a complete picture of tenant economics, prevailing
rents, and capital values
Financial Analysis – a property investment tool that investors can use to create financial models to determine net return after tax and return on investment. Investors can understand specific tax implications. Our property comparison tool allows investors to compare investments on an after-tax basis to determine the best investment for them. Investors can even compare properties in different countries
Du Val Dynamic Pricing™ – Du Val Global offers a range of properties for sale from leading developers in Australia, New Zealand, and the United Kingdom via its proprietary Du Val Dynamic Pricing™ algorithm. This sophisticated pricing model levels the playing field for small investors through aggregation, providing discounts of between 7.5% and 15% from retail prices, which, until now, have only been available to large institutional investors.
Portfolio Management – a property portfolio planning tool investors can use to monitor and track the performance of their investments.
Interested in giving our platform a go? Start your free trial today at Du Val Global.
