When buying a leasehold property, the length of the lease is a critical factor to consider. Many prospective buyers wonder if a 100-year lease is long enough. The answer depends on your circumstances, future plans and how the lease length impacts property value and costs. In this article, we’ll explore the implications of a 100-year lease, the pros and cons, and how you can go about extending a lease.
Should you buy a property with a 100-year lease?
This all depends on your personal preference. A 100-year lease can be perfect for some buyers, but it’s essential to understand what the length means for you now and in the future. Typically, only a lease lower than 80 years can be a problem as it may be harder to sell or get a mortgage on.
Why a 100-year lease can work for you
Long lasting: A 100-year lease offers decades of ownership and may never become an issue during your time in the property.
Potential for extension: Most leasehold properties allow owners to extend the lease, often by an additional 90 years, ensuring long-term value.
More affordable: Properties with shorter leases, such as 100 years, may be priced lower than those with longer leases, making them an appealing option for buyers on a budget.
Potential risks
Reduced value over time: As the lease length diminishes, the property may lose value. Buyers and mortgage lenders often view shorter leases as less attractive.
Difficulty selling in the future: If the lease drops below 80 years, extending it becomes more expensive, and the property may be harder to sell.
Additional costs: Extending a lease or buying the freehold incurs legal and administrative costs, which could outweigh the initial affordability of the property.
What are the pros and cons of a 100-year lease?
Pros ✅ | Cons ❌ |
|---|---|
Properties with shorter leases often have a lower purchase price | As the lease gets closer to expiring, the property’s value diminishes, especially once it falls below 80 years |
A 100-year lease typically provides decades of worry-free ownership | Extending a lease with fewer years remaining is more expensive due to the 'marriage value', a premium paid to the freeholder |
Leaseholders generally have the legal right to extend their lease, adding another 90 years | Some lenders are reluctant to provide mortgages on properties with leases below 80 or 70 years |
If you don’t plan to live in the property for decades, the shorter lease may not impact you | Potential buyers may be put off by a lease nearing the 80-year threshold |
How long should a lease be when buying a flat?
When buying a leasehold flat, the length of the lease is one of the most important considerations. Typically a 'long lease' is one over the 125-year mark and a 'short lease' is one below 85 years. You may also want to weigh up the differences between leasehold vs freehold in our full guide.
Types of lease lengths
125+ years | A lease of 125 years or more is considered long and provides peace of mind for both buyers and mortgage lenders. |
80-125 years | A lease in this range is still acceptable but may require extending within your lifetime to retain property value. |
Below 80 years | Leases under 80 years can cause issues with property value, selling, and obtaining a mortgage. |
💡Editor's insight
"In my opinion, the 80-year mark really matters. When a lease falls below 80 years, extending it becomes significantly more expensive due to the marriage value. This added cost compensates the freeholder for the increase in the property’s value resulting from the extension."
What is a 999-year lease?
A 999-year lease is often referred to as a 'virtual freehold' because it effectively provides ownership for an indefinite period. A 999-year lease is the maximum length that a leasehold property can have.
Key features of a 999-year lease
Unlikely to expire: The lease term is so long that it’s practically permanent.
No need for extension: Owners of properties with 999-year leases rarely need to worry about extending the lease or the associated costs.
Full mortgage eligibility: Mortgage lenders view 999-year leases as highly secure, making them more attractive to buyers.
100-year vs 999-year leases: What’s the difference?
The difference between a 100-year lease and a 999-year lease is significant, particularly when it comes to long-term property value and ownership.
Aspect | 100-year lease | 999-year lease |
|---|---|---|
Ownership Duration | Limited to 100 years | Effectively indefinite |
Value Over Time | Decreases as the lease shortens | Retains value indefinitely |
Extension Requirements | Likely needed within decades | Unnecessary |
Mortgage Eligibility | May become challenging | Always viewed favourably by lenders |
Resale Appeal | Diminishes with time | High resale appeal |
Can I extend my lease?
Yes, leaseholders in the UK typically have the legal right to extend their lease under the Leasehold Reform Act 1993, provided they meet certain criteria. A specialist lease extension solicitor can help guide you through the full process from start to finish.
How lease extensions work
Eligibility: You must have owned the property for at least two years.
Extension terms: Residential leaseholders can extend their lease by 90 years, with ground rent reduced to a nominal amount.
Costs: The cost of extending a lease depends on factors such as the current length of the lease, the property’s value and the marriage value (if the lease is below 80 years).
Professional help: You’ll need a surveyor to calculate the extension cost and a solicitor to handle the legal paperwork.
Latest government reforms
The UK Labour government has proposed reforms to simplify and reduce the cost of lease extensions. Keep an eye on updates, as these changes could benefit leaseholders in the future. As of 2024, Housing Minister Matthew Pennycook says measures in the Leasehold and Freehold Reform Act will be implemented 'at pace' in 2025 to allow more leaseholders to buy their freehold.
Conclusion
So, is a 100-year lease long enough? It can be, but it depends on your goals and plans for the property. A 100-year lease offers decades of ownership and is often sufficient for a lifetime, but its diminishing value over time can pose challenges. Longer leases, such as 999 years, provide greater security and appeal to both buyers and lenders.
Understanding the implications of lease length ensures you make an informed decision, protecting your investment and peace of mind. If you need legal advice, speak to one of our specialist property law lawyers for help.