Lease length: a ticking clock
Nouran Moustafa, executive financial and mortgage adviser at Roxton Wealth in London, told Mortgage Introducer lease length is one of the first things buyers must examine, and one of the most commonly overlooked.
“If someone now is a first-time buyer, 30 years old, and they buy a flat that has 100 years on the lease, by the time they die and this flat gets passed over to the second generation, the flat will be worthless in 20 or 30 years,” she said. “If you’re taking the stress of a mortgage, if you’re putting down a deposit, you need to make sure that there is a decent number of years of lease left on the flat.”
Moustafa described a case in which a client wanted to purchase a flat with only 60 years remaining on the lease. She advised against it. “She was 30, so if she were to live until 90, she would pay off the mortgage. But by the age of 90, she would own nothing.”
Beyond the personal risk, lenders themselves are reluctant to lend against short-lease properties, which compounds the problem for buyers seeking mainstream mortgage products. The Leasehold and Freehold Reform Act 2024 introduced new rights for leaseholders to extend their leases, but the process remains costly and the underlying structural issue for buyers persists.
When lenders say no
Fire safety and cladding issues, particularly in higher-rise buildings, remain a significant barrier to mortgage lending on certain London flats. The Building Safety Act 2022 imposed new responsibilities on building owners to fund remediation work, but progress across the housing stock has been uneven, and many properties remain caught in a lending grey area.