Selling a property with a short lease at auction is often considered ideal, due to the speed of the sales process, the level of transparency involved, and the fact that many auction buyers are more motivated and have a clear understanding of what short leases mean.
Buyers can achieve a quick sale rather than investing the time and cost required to extend a lease or purchase the freehold, and sell the property as-is, with sellers able to buy with confidence following the recent reforms to the rights of short leaseholders.
The Leasehold and Freehold Reform Act 2024 [1] gave property owners with short leases several entitlements, such as the ability to extend their leases or buy the freehold without waiting two years, which has mitigated many of the issues perceived as making short-leasehold real estate less desirable.
Key takeaways
- Auctions attract diverse buyers, from investors to cash purchasers, giving sellers the right audience for short-leasehold properties, who are less likely to be unsure about what a short lease means or whether it is appropriate for them.
- Sellers can market a short-leasehold property at auction straight away, without spending time and money applying for an extension.
- Property auctions offer quicker transaction times and reduced risk, with a legally binding sale process that avoids issues such as buyers backing out before completion.
Why Is it Harder to Sell a Leasehold Property With a Short Lease?
Leasehold real estate with a short lease term remaining, usually considered anything less than 80 years, can put off buyers who aren’t confident they’ll be able to extend the lease, or buy the freehold, or are reliant on traditional mortgage financing. Generally:
- Mortgage providers expect applicants to have a minimum remaining lease term to offer secured financing for a property purchase.
- Short leases can impact the saleable value of real estate compared to a similar property with the same characteristics but a longer lease or freehold ownership.
- Buyers might be worried about what extending the lease would cost, the complications of dealing with the freeholder and paying service charges, and the legalities of owning the residence but not the land it sits on.
While the owner could apply for a lease extension or even consider buying the freehold, this will take time and incur expenses, which is why many decide to sell at auction if they’re hoping to release funds from the property as quickly as possible.
Selling at auction makes sense because buyers are less likely to be reliant on traditional mortgage financing, and so the difficulty linked with mortgaging a short leasehold property won’t apply.
Is it Worth Extending a Short Leasehold Period Before Selling a Property?
This depends on the owners’ objectives, but it’s not always worthwhile to extend the lease, even if doing so could improve the value. Advantages of extending a lease before selling include:
- The likelihood of achieving a higher sale price
- Being able to market the property to a wider buyer demographic
- Finding it easier to secure mortgage financing against the property if relevant
However, extending a lease carries an upfront cost that can reach several thousand, is often time-consuming, and requires the buyer to negotiate with the freeholder, which they may not be interested in doing.
How Has the Leasehold and Freehold Reform Act 2024 Affected Short Leasehold Property Sales?
The changes introduced in this legislation are wide-ranging and have made it easier for owners to sell short leasehold properties, with reforms that include:
- Abolishing the two-year minimum ownership period before a leaseholder can apply to extend the lease or buy the freehold
- Changing the standard extension period from 90 years to 990 years, making leasehold ownership more comparable to freehold
Buyers have the assurance that they can extend the leasehold in their own time, while benefiting from a competitively priced property to compensate for the inconvenience, and look forward to further reforms in the near future.
The draft Commonhold and Leasehold Reform Bill [2], which was published in January 2026, will make leasehold ownership more attractive, with anticipated changes such as capping ground rent at £250 a year and making it cheaper to extend the lease.
How Does Selling a Short Leasehold Property at Auction Compare to Other Options?
Owners can sell as-is at auction for a faster, simpler sale; choose to begin the lease extension process and sell the property while it is pending; or extend the lease themselves and list the property once the process has concluded – but there are pros and cons to each option.
Selling As Is | Assigning a Notice to Extend | Extending the Lease | |
Timeframes | Minimal | Moderate | Highest |
Costs | Limited to auction costs | Legal fees are typically around £500 to £1,000 | Full cost of purchasing the extended lease |
Sales Method | Auction – where more buyers will consider a short leasehold property, and the transaction will be completed quickly. | Potential to sell at auction or to informed buyers who understand that the lease extension process has been started. | Gives the seller the option to sell at auction or on the open market. |
Clive Emson’s property auction specialist says, ‘Selling a short lease property at auction is effective and quick, connecting sellers with buyers who understand the opportunity this represents, and with little potential for the sale to fall through and disrupt the sellers’ plans.’
Frequently Asked Questions
Why Is Selling at Auction Ideal for Short Leasehold Properties?
Owners can sell real estate with a short lease at auction and reach several buyer demographics, including developers, investors and cash buyers who understand how short leases work, aren’t reliant on mortgage financing, and can factor the cost of extending the lease into their bids.
How Long Does it Take to Sell a Property at Auction With a Short Lease Term?
Auctions offer a fast way to complete a property sale, and the lease duration does not affect the turnaround time. The exchange occurs immediately after the auction finishes, and completion takes around four weeks.
Why Sell a Short Leasehold Property at Auction Without Extending the Lease?
Owners who need to release equity quickly, want to use the capital tied up in a property for other projects, or want a fast sale without allowing the remaining leasehold period to become even shorter often choose an auction sale.
This is also suited to sellers who aren’t keen on investing time and money in applying for an extension and don’t want the uncertainty of trying to sell through an alternative process.
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