Selling a Flat with a Short Lease When the Freeholder Can't Be Found
This is a made-up example. The people, places and numbers are not real.
Why a lease under 80 years costs so much, what lenders accept, whether to extend first or sell as is, and how the court gives a new lease.
- Category
- Tenurial and Occupational: short lease and absent freeholder
- Property
- One bedroom flat in a 1960s block of eight
- Area
- Essex coast town
- Main problem
- Lease of 58 years, too short for lenders, freeholder untraceable
- Time to complete
- 6 weeks to buy, 9 months to the new lease
- Value added
- About £20,000
01The Situation
Janet Pryor owned a one bedroom flat in a block of eight, built in 1966 on a 99-year lease. By 2025 the lease had 58 years left. She had moved in with her partner in Norfolk and wanted to sell to clear debts.
The freeholder was a private individual who bought the block in 1979. Nobody had received a ground rent demand since 2018, and letters to his last known address in Surrey came back unopened. Two estate agents told Janet the flat would only sell to cash buyers. She did not have the £45,000 or so it would cost to extend the lease herself.
02The Diagnosis
Why 80 Years Matters
When you extend a lease, you pay the freeholder for what they lose. Once the lease has 80 years or less left, the price also includes half the marriage value. That is the rise in the flat's value when the short lease becomes a long one. On Janet's flat it was about £22,000, more than half the bill. Above 80 years, marriage value is not charged at all, so the cost jumps as a lease crosses that line.
What the 2024 Law Changes, and When
The Leasehold and Freehold Reform Act 2024 abolishes marriage value on paper. In October 2026 that part is still not in force. It needs regulations setting the rates used in the sum, and the government's consultation on those rates only closed on 21 October 2026. A group of large freeholders lost a High Court challenge to the Act in October 2025 and are appealing. No start date has been given, and most advisers do not expect the new rules before late 2027. Price today's deal on today's law.
What Lenders Accept
There is no single rule. Each lender sets its own minimum and lists it in UK Finance's Lenders' Handbook. Many want 70 to 85 years left when the mortgage starts, and some also want a set number of years left when it ends, such as 30 years beyond the mortgage term. Below 70 years most mainstream lenders say no. At 58 years the buyer pool was cash only.
Extend First or Sell as Is
If the freeholder can be found, a seller can serve the notice to extend (a section 42 notice under the Leasehold Reform, Housing and Urban Development Act 1993) and pass the claim to the buyer with the sale, so the buyer pays the premium and the seller gets a better price. Since 31 January 2025 you no longer need to have owned the flat for two years to do this. Extending first only pays if you have the cash and the time, and the price rise must beat the premium plus both sides' costs.
No One to Serve Notice on
The normal route starts with a notice served on the freeholder. If he cannot be found, that route is closed. There is a court route for this, but it is harder to hand over halfway, so the buyer usually starts it after completion.
A Lease Getting Shorter
Each year that passes adds roughly £1,000 to £1,500 to the price of the extension on a flat like this, and lowers the cash price.
Unpaid Ground Rent
Seven years of ground rent at £100 a year had not been paid. That has to be settled as part of the new lease.
03The Value
Two legal points open this up.
First, the two year rule has gone. That change came into force on 31 January 2025. A buyer can now buy and start the claim the same week.
Second, section 50 of the 1993 Act lets the county court make an order for the new lease when the freeholder cannot be found. The First-tier Tribunal (Property Chamber) sets the price, the money is paid into court for the freeholder to claim if he ever appears, and the court appoints someone to sign the new lease in his place. The 2024 Act will move this route to the tribunal in future, but in October 2026 the case still starts in the county court.
The buyer's valuer worked out the likely price of the extension:
Long Lease Value
Similar flats on long leases sold for £235,000 to £245,000. Call it £240,000.
Short Lease Value
Comparable short lease sales and the published tables suggested about 75 per cent of that with mortgages available, so £180,000. With no mortgages, cash buyers were paying less again.
The Freeholder's Loss
The ground rent (£100 a year for 58 years) was worth about £1,500, and getting the flat back in 58 years was worth about £14,300 today, taken at the usual 5 per cent rate.
Half the Marriage Value
£240,000 for the long lease, less £180,000 for the short lease and £15,800 for the freeholder's interest, leaves about £44,200. Half is £22,100.
Total
About £37,900 for 90 extra years and no ground rent, plus £700 of unpaid rent.
The new lease adds 90 years to what is left, at no ground rent, so 58 years becomes 148.
A cash buyer then worked back from £240,000: the premium and rent of £38,600, about £5,800 of legal, valuer, tracing and court costs, £9,050 of stamp duty at the higher rates, £1,500 of legal fees on the purchase, and a margin of about £20,000 for nine months of risk and money tied up. That gave £165,000.
Janet did her own sum. Selling with a 58 year lease to the open market, an agent thought £150,000 to £160,000 from a cash buyer after months of marketing. Extending first would have cost her about £44,000 she did not have, and nine months.
04The Execution
Weeks 1 to 6, the Purchase
The buyer's solicitor checked the register, the lease and the block's insurance. The buyer paid £165,000 cash and completed six weeks after the offer. Janet paid normal selling costs and walked away with no further work.
Weeks 6 to 12, the Search
The buyer's solicitor ran a tracing agent search (£250), checked the Land Registry, Companies House and probate records, wrote to every address found and placed notices in a local paper and a legal paper (£380). They found the freeholder had died in 2016 with no will and no one had sorted out his estate. Every step was kept in a dated file, because the court asks what was done.
Week 13, the Court Claim
The solicitor filed a claim in the county court under section 50, with a statement of the search and the valuer's report. The court fee was a few hundred pounds.
Weeks 14 to 30, the Price
The court sent the price question to the tribunal, which decided it on the papers. It set the premium at £37,900, in line with the buyer's valuer, and confirmed the £700 of unpaid ground rent.
Weeks 31 to 38, the Lease
The buyer paid £38,600 into court. The court ordered the new lease, a court officer signed it, and the buyer's solicitor registered it at the Land Registry. Legal fees were £3,900 and the valuer charged £950.
05The Outcome
Bought for
£165,000
Spent
£54,950 on the premium, ground rent, stamp duty, legal, valuer, tracing and court costs
Worth After
About £240,000 with a 148 year lease and no ground rent
Value Added
About £20,000
The buyer let the flat at £900 a month during the claim, which covered most of the cost of the money. After the new lease was registered they refinanced at 75 per cent of £240,000 and took most of their cash back out. Janet sold in six weeks without paying a penny towards the extension, which she could not have funded.
The Lessons
- Below 80 years, the extension price includes half the marriage value. In October 2026 that is still the law, and no date has been set for the change.
- Check what lenders will accept before you price. Many want 70 to 85 years at the start of the mortgage, and below 70 the buyers are mostly cash.
- If the freeholder can be found, serve the notice yourself and pass it to the buyer with the sale. You no longer need to have owned the flat for two years.
- If the freeholder cannot be found, the county court can give a new lease under section 50. The money is paid into court. Keep a dated record of every search, letter and advert.
- Work out the premium before you sell or offer: long lease value, short lease value, the freeholder's loss and half the marriage value. Then add 15 to 20 per cent for costs and time.
- This is general information, not legal advice. Check your own position with a solicitor and a specialist lease valuer.
Buy Property Like This?
Tell us what you buy and we will only send you deals that fit.
Register a MandateCome Across These in Your Work?
Agents, solicitors, surveyors and accountants: send them to us. The client stays yours.
Introducer Enquiry