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In essence the shorter the time left on a lease, the less a home is valued at.
An unexpired duration of lease of 100 or more years has little or no influence on the worth. In the instance of leases greater than 100 years, the worth of the property is very similar, whatever the number of years remaining. The extent of the lease is considerably longer than the natural life of most people so this is not a question for mortgage lenders in particular.

Fall below in the order of 90 years and the hypothetical value of your flat falls continually faster each year, though at the start only bit by bit. Without wanting to concern apartment owners, the unexpired duration reduces eventually to zero, when the freeholder can take possession of the apartment. The good news is this is very unlikely ever to come about. The down side is that you might need to invest in the lease extension to be sure it does not.

A hypothetical suburban flat with a lease remaining of a year will be virtually worthless compared with a analogous property with 100 years. After all, who would wish to buy a flat that they would have to hand back to someone else in approximately a year?

Leasehold experts agree that an archetypal flat with 80 years remaining on its lease will be valued at 5% less than one with a lease much over 100 years. (The numbers will differ based on a number of things but these can be used as a guide – you should check with a specialist surveyor and you can reach them on the website of the Association of Leasehold Enfranchisement Practitioners, ALEP). 10 years later, with 70 years outstanding, it would have lost another 8% of its value so that it will be worth 13% less than a long-lease neighbour. Wait another 10 years until the unexpired term is 60 years and it will have lost 20% of its peak value. Looking at an apartment of £200,000 with a long lease in suburban London, this would be worth £40,000 less when the lease has 60 years.

These figures don’t yet take into account the marketability of the flat. In the event that you have a neighbour with an indistinguishable apartment with a short lease and your lease has been extended, any prospective buyers would evidently rather view the one that does not call for the inconvenience and expenditure of having the lease extended.

There are actually several main milestone years in relation to the unexpired term:
80 years – when the lease drops below eighty years a certain component, called marriage value, becomes incorporated in the technical valuation of a home. To understand how a flat is valued, read our article on that, but you ought to understand that marriage value becomes built-in in how surveyors work out how much you pay for a longer lease.
70 years – scores of mortgage lenders will not make loans on properties with leases this small. Lender guidelines contrast on acceptable lease length; a number are longer, some are shorter. Not only might it have an effect on you if lessees are thinking about buying such an apartment, but it has a large influence if flat owners are selling one. Given that numerous flats are purchased with mortgages, if lots of your buyers can’t get one then the quantity of people who can buy your flat decreases. With a smaller market, the price will be pulled lower.
60 years – not many solicitors will propose that their clients acquire a flat with a lease this short. If you are selling, your market falls further, dragging the price downhill appreciably. If flat owners are selling, they may well need to put aside the money to make bigger the lease in order that you can attract buyers.

A word of caution on where flat owners get advice a propos lease length. While there are loads of admirable managing agents and estate agents who understand leasehold issues, anecdotal experience suggests that several do not. Rather than aknowledging a lack of expertise, a significant number can bear in mind their private self interest and try to assure buyers and sellers that a short lease may not be a large hindrance. This is a specialist area and mistakes are costly: flat owners should think about getting advice from an experienced leasehold surveyor, solicitor or intermediary if you have any doubts or problems as regards residential property leases.

About the author
Andy Szebeni is part of the management team of the Association of Leasehold Enfranchisement Practitioners. ALEP has over 100 members, each vetted ahead of joining. They include solicitors, surveyors, intermediaries, managing agents and other professionals specialising in the field of leasehold enfranchisement. Have a look at the searchable list of vetted members at http://www.alep.org.uk/membership/.

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