There are many flats that look too good to be true if you’re looking for a place to call home. What is the reason for this? It’s very likely that the lease on the property is short.
A short-term lease may seem appealing at first, but is there really savings? Is it possible to simply extend the lease? Or should you just extend the lease and move on to another property?
These are all great questions. We hope to answer them all in this post about short-term lease property.
What Is A Lease Anyway?
A lease is nothing more than a contract between the owner of the property and the tenant/s that wish to rent it. The lease is a way to guarantee the tenant (or lessee) that they have a roof over their heads for a specified period of time while also ensuring that the landlord (the Lessee) receives fair payments in return. This also includes provisions like cleaning of communal areas and buildings cover for the structure of the flats.
Therefore, leases are legally binding and cannot be taken lightly.
What Is Considered A “Short” Lease?
If a lease is allowed to expire after 80 years, any costs for extending it will increase rapidly as the marriage value (the increase in value created by a new lease being issued) starts to become payable. Any lease less than 80 years is considered a short lease.
Is It Possible To Extend A Lease On A Property?
It is possible to extend a short-term lease on a property. However, it is not always easy to do. To learn more, see our guide on statutory lease extensions. You might be the leaseholder who stumbled upon this article.
Do You Need To Extend An Initial Lease?
You don’t need to but, in most cases, extending a short-term lease is beneficial.
Some people may be interested in a short-term lease.
Landlords who want to just draw rental charges for the next few years without worrying about whether the lease will revert to the freeholder after the lease ends.
People who don’t have any dependents or retirees believe that their lease will last them for many years. They also avoid spending large sums of money.
There is no right or wrong here. However, unless you fall into one of the above categories, it is likely that you would be better off extending your lease sooner than not.
When Buying A Flat, You Can Get A Mortgage Even If The Lease Is Only For A Few Months
This can be tricky, especially when the lease on the property has been extended beyond 80 years. It may not be possible if the lease has only 55 years remaining.
Although you may be able to find a specialist lender that will meet your needs, be prepared to pay a premium for this privilege. The lender will take on more risk than the homeowner in most cases. In these cases, the interest rate on short-term lease properties will likely be higher.
Is A Short-Term Lease Worth It?
Like everything else related to property, the answer lies with each individual. It will be for some the only choice, while it may not be an option for others. For others, a short-term lease will prove more costly than it is worth.
However, one thing is certain: short-term lease properties can be a good investment in the long term. But you should be ready for some short-term problems before you see any benefits.
Get in touch with us if your desire to sell flat with a short lease.