With major reforms underway and uncertainty surrounding lease extension costs, 2025 presents both risks and opportunities for flat owners with short leases. This guide explores whether now is the right time to sell, examining your options in light of market conditions, legal changes, and personal financial circumstances.
Selling Your Flat?
News & Market Updates: 27 July 2025
If you own a short lease flat in the UK, deciding whether or not to sell in 2025 is far from straightforward. The introduction of the Leasehold and Freehold Reform Act 2024 (LAFRA) has introduced a new set of opportunities and challenges for leaseholders, but many critical aspects of the legislation remain uncertain.
If you're considering selling your flat, you essentially have four options:
Sell now with a short lease
Sell now with an extended lease
Wait before selling with a short lease
Wait before selling with an extended lease
Each option carries its own set of pros and cons, which are summarised below.
| Option | Pros | Cons |
|---|---|---|
| Sell now with a short lease |
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| Sell now with an extended lease |
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| Wait before selling with a short lease |
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| Wait before selling with an extended lease |
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Two-Year Rule Abolished: As of January 2025, you no longer need to wait two years to extend your lease. This is a significant advantage for new owners.
Marriage Value: The Government has confirmed that marriage value (a cost applied to leases under 80 years) will almost certainly be abolished. This could save leaseholders tens of thousands of pounds.
Investment Rate (Reversion Discount): However, the investment rate used in lease extension calculations will now be prescribed by the Secretary of State. The rate is expected to be lower (i.e. more expensive for leaseholders), potentially offsetting the savings from abolishing marriage value.
Consultations Underway: The Government is actively consulting on the prescribed rates and other valuation changes.
Implementation Timeline: Secondary legislation is needed to finalise many of these reforms, and no specific dates are confirmed. The most impactful valuation reforms may not take effect until late 2025 or even 2026.
Some elements of the Act are under judicial review, with a key hearing scheduled for July 2025. The outcome may affect how quickly reforms can be enacted.
Could it be cheaper to extend later? Possibly.
Will it definitely be cheaper? We simply don’t know.
Is it risky to wait? Yes, because lease length and market changes could increase your costs in the meantime.
Lease Length:
Under 80 years: Marriage value still applies until abolished. Extending now avoids this extra cost.
Under 65 years: Likely unmortgageable. Selling without extending may be very difficult.
Over 80 years: You have more flexibility. Extending is less urgent.
Ground Rent:
High ground rent can deter buyers. Reforms may cap or remove onerous ground rents, but nothing is guaranteed.
Flat Type:
If the flat is already unmortgageable (e.g. a small studio flat), lease extension might not significantly improve marketability.
Mortgage Lender Criteria:
Many lenders require 70+ years remaining on the lease. Below this, your buyer pool shrinks dramatically.
Market Conditions:
2025 is a slow market with high supply and cautious buyers.
If mortgage rates drop or demand rises, prices may improve.
Personal Circumstances:
If you need to move soon or settle an estate, waiting may not be practical.
If you’re not in a rush, you might have the luxury of holding out.
Financial Constraints:
Extending a lease typically costs thousands to tens of thousands of pounds.
Costs rise as lease length shortens.
Tax Implications:
CGT: Selling with a short lease may reduce your capital gains tax liability.
Cost of lease extension may be deductible from your CGT bill if sold after extension.
Stamp Duty for Buyers:
High SDLT thresholds (especially for second homes) affect what buyers can afford to pay.
Buyers who are not purchasing the property as their main home (e.g. buy-to-let investors or second home owners) must pay an additional 5% SDLT surcharge on top of standard rates. This can significantly impact affordability and limit the maximum price such buyers are willing to offer.
SDLT calculator: MoneyHelper SDLT Calculator
Lease is under 80 years:
Extending now is wise if you want to maximise price and avoid marriage value.
Lease is under 65 years:
Extension is almost essential if you want to sell to anyone other than a cash buyer.
Need to sell urgently:
Consider selling to a cash buyer at a discount, especially if extending isn't affordable.
Long-term investor with no immediate pressure to sell:
May benefit from waiting for legislative clarity, but remember that each year of delay increases the extension premium.
Flat is unmortgageable or in poor condition:
Lease extension may not make a meaningful difference. Focus on pricing for cash buyers.
The government’s slow progress has left many leaseholders in limbo. Until full clarity emerges, each case will turn on its unique facts: the lease length, property type, marketability, your personal finances, and how much risk you're prepared to take.
To further guide you, here are five real-world scenarios faced by short lease flat owners in 2025. Each includes the lease length, flat type, seller's circumstances, and a suggested course of action.
Flat type: Two-bedroom purpose-built flat in a desirable location
Lease: 70 years remaining
Situation: Currently tenanted with a good yield; no urgency to sell
Recommendation: ❌ Don’t sell now. ✔️ Either extend the lease now or wait to extend.
Extending the lease (now or soon) will significantly improve resale value and make the flat mortgageable.
Selling now, especially in a slow market, could result in undervaluation.
Waiting could be advantageous if LAFRA abolishes marriage value, but that isn’t guaranteed.
Lease extension may also be cheaper now due to falling values from market oversupply.
Flat type: Small studio (<30sqm) above commercial premises
Lease: 50 years remaining
Situation: Owner intends to sell in the next 12 months
Recommendation: ✔️ Sell now with a short lease
Not suitable for mortgage lending due to size and location.
Only cash buyers will be viable, even if the lease is extended.
Extending the lease would not increase buyer pool or value significantly.
Best to sell before the lease shortens further and devalues the property.
Flat type: Leasehold flat currently occupied by owner
Lease: 40 years remaining
Situation: Considering renting it out vs selling to fund onward purchase
Recommendation: ✔️ Sell now with a short lease (conditional)
If funds from the sale will assist in a lower mortgage rate or deposit, selling now may be wise.
Keeping the flat would trigger a 5% SDLT surcharge on the next purchase (unless sold within 3 years).
Renting it out and extending is only worth considering if landlord responsibilities are acceptable and funds aren’t urgently needed.
Flat type: Leasehold flat in negative equity
Lease: 70 years remaining
Situation: Owner cannot afford to extend; wants to relocate
Recommendation: ✔️ Sell now with an agreement to extend simultaneously
Buyer can apply for lease extension once sale is agreed.
This will allow mortgage funding on completion, achieving a higher sale price than a cash-only deal.
Requires a knowledgeable estate agent and solicitor familiar with simultaneous lease extensions.
Flat type: High-value flat with extremely short lease
Lease: 15 years remaining
Situation: Executors holding probate; uncertain about LAFRA timing
Recommendation: ⚖️ Depends on valuation advice. Either extend now or sell as is.
Extending now may be safer, as changes to the deferment rate under LAFRA could increase costs for very short leases.
Alternatively, selling now with a short lease avoids the uncertainty of pending legislation.
Executors should factor in inheritance tax implications and consult beneficiaries before deciding.
Here’s a summary table showing who is likely to benefit or lose under the Leasehold and Freehold Reform Act (LAFRA), depending on the remaining lease length - assuming current draft proposals and what we know so far:
| Lease Length (Years Remaining) | Current Situation | Likely Change Under LAFRA | Impact for Leaseholder | Why? |
|---|---|---|---|---|
| Under 20 years | Very expensive; high marriage value and reversion | Marriage value scrapped, but reversion value still high | 🔸 Mixed / Possibly higher | No marriage value, but deferment rate and standardised calc might still lead to high cost |
| 20–40 years | Expensive due to marriage value | Marriage value removed | ✅ Cheaper | Main beneficiaries - major drop in cost due to abolition of marriage value |
| 40–80 years | Cost rises as lease gets closer to 80-year mark | Marriage value removed | ✅ Cheaper | Noticeable savings, especially just below 80 years |
| 80–90 years | Relatively affordable; no marriage value | Could be more expensive depending on prescribed rates | 🔸 Slightly worse or similar | New formula might raise premiums slightly |
| 90–100+ years | Very low cost to extend | Possible small increase | 🔸 Possibly worse | New system could standardise minimum costs even when current ones are very low |
| 999-year lease or share of freehold | Usually no need to extend | No change | ➖ No impact | Already secure tenure |
Big winners: Leaseholders with 30–80 years remaining - they’ll save the most due to removal of marriage value.
Uncertainty: Still exists for very short leases (<20 years) and very long leases (>90 years) depending on what deferment rate and discount rate the government chooses.
Other benefits of LAFRA: 990-year extensions, banning of ground rents, and consolidation of claims could also add value overall.
In simple terms:
Selling a short lease flat in 2025 requires a careful balance of legal, financial, and personal considerations. The reforms introduced by LAFRA hold promise, but the uncertainty surrounding their final form and timing makes speculative waiting risky.
If you need to sell soon: Extend the lease if you can afford it, especially if it’s under 80 years.
If you can wait: Stay informed, but be aware that time is not your friend when it comes to lease length.
If you’re unsure: Get professional valuation advice and legal guidance to inform your strategy.
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