Before answering this question I should probably define what we mean by a short lease. The majority of residential leases used to be for a term of 99 years, but more recently leases on modern purpose-built flats have been for 125 years or longer. Most leases on ex-local authority flats are also for 125 years.
The value of a leasehold flat diminishes as the lease gets shorter. There are a number of published graphs that show how the value of a flat reduces over the years and these are known as ‘Graphs of Relativity’. The basic concept is that a flat with a 99 year lease or more will have a relativity of 98-100% of the value of the freehold reversion in the same flat. As the lease gets shorter the percentage relativity decreases. A flat with a lease of 70 years unexpired will have a relativity of 85-90% depending on which particular graph you refer to. If the lease were only 50 years the relativity would have reduced to about 70-75%.
The simple answer then is yes, there is no problem in principle in buying a flat with a short lease provided that its price reflects this fact. In practice it is more difficult, particularly if you need to raise a mortgage to buy the property. Many lenders will be reluctant to lend on flats with short leases. In the past the cut off point was usually in the region of 70 years, but since changes in legislation a number of lenders now consider a short lease as being less than 80 years, as this is the point at which ‘marriage value’ kicks in when applying for a new lease under the terms of The Leasehold Reform, Housing and Urban Development Act 1993.
It is still possible to consider buying a flat with a short lease, but the prospective lender will normally grant a mortgage on the basis that the vendor will apply for a new lease and that the benefit of the vendor’s notice under Section 42 of The Leasehold Reform, Housing and Urban Development Act 1993 is transferred to the new purchaser at the same time as the leasehold interest in the flat, and there may well be a significant retention on the mortgage (the lender may hold some money back until the lease is extended).
If you buy a leasehold flat with a short lease you will have to wait two years before you can apply for a new lease in your own right.
When purchasing a flat with a short lease you will have to consider how much it will cost to obtain a new lease and factor this into your calculations when considering how much you should pay for the flat with its existing lease.