"Clients often assume that short lease properties are dead ends. In reality, they’re opportunities that just need a different route to realise their potential"
- Donna Francis - Envelop
Let’s not pretend that short-lease properties represent a ‘straightforward’ property purchase. Most traditional lenders avoid them. Many less-experienced buyers don’t understand the complications. Values fall. As a result, more often than not, good opportunities go to waste because too few know how to properly fund them.
Yet short leases, especially those under 80 years, can offer real value to those with the right experience and specialist support to make the most of opportunities when they arise.
As a landlord or investor, time is money, but the issue with short leases isn’t just about time; it’s also about liquidity. Once that lease drops below 80 years, two things happen. Firstly, “marriage value” kicks in, meaning the property owner will have to pay the freeholder extra to extend it. Secondly, high-street lenders usually avoid them, as they’re not prepared to risk their security on a diminishing asset.
This is where specialist finance becomes a smart, strategic solution and it’s also important to point out that the most appropriate offerings may only be available through intermediary channels.
Take bridging finance, for example. Done properly, this allows potential purchasers and existing owners of short lease properties to act fast. It enables landlords and investors to buy such a property outright, extend the lease within a matter of weeks, and refinance onto a standard mortgage once the asset qualifies. For existing owners, the same route applies, raise capital, extend the lease, then refinance. This not only serves to increase the property’s value but also unlocks better terms and a stronger loan-to-value position on exit.
The speed of this solution matters, especially at auction. Short-lease properties come up often, usually overlooked or underpriced due to perceived risks. For those who can spot the value, fund it, and act fast, there’s real scope for uplift.
These properties regularly attract experienced investors who understand how to finance them. That means working with specialists who know short lease dynamics and can arrange funding not just for the purchase, but for the lease extension too - often as one facility, easing the cashflow burden.
The 2024 Leasehold and Freehold Reform Act may eventually shift the ground rules around leasehold properties but until secondary legislation comes into force, opportunities are out there in abundance. This is not the time to wait for the dust to settle. It’s the time to act with smart finance and specialist support.
Clients often assume that short lease properties are dead ends. In reality, they’re opportunities that just need a different route to realise their potential. That’s where specialist advice and our relationships with alternative lenders come in. With the right structure, property investors are not just buying a property, they’re buying the ability to turn a distressed asset into a profitable, long-term investment.
I’ve worked in this space for over two decades, and if there’s one thing I’ve learned, it’s when others hesitate, forward-thinking property investors swoop. The deals are out there. And the money follows those who know how to unlock value that others can’t see.
