Why this St John's Wood flat costs under two hundred grand

A one bedroom flat in London's smart St John's Wood is up for sale for just £185,000 - but, as you've probably guessed, there's a catch.

Most properties in the area go for a million or more, but this well-kept flat in a charming and quiet cobbled mews is still priced well under the UK average.

The first-floor flat, on Cedric Chambers, has a 13-foot-by-12-foot open-plan kitchen/reception room, with a double bedroom and shower room. It's near St John's Wood High Street and Regent's Park, and would normally sell for around half a million.

It's available through agents Foxtons and Kinleigh Folkard & Hayward.

The reason for the low price-tag is that the lease is now down to only five years, meaning you'll have to hand over the keys and walk away - unless you fork out a fortune to extend this.

And because of the short lease, no lender will offer a mortgage, meaning it's one for cash buyers only. But there are big advantages, in that the buyer will be able to avoid stamp duty altogether - something that's almost unheard of in London.

Lease-holders in the UK have the right to extend the term by 90 years at a fair price, as long as they've owned it for at least two years.

Anything with a lease of under 80 years, though, will carry a big premium, as the buyer will be expected to pay half the flat's 'marriage value' - the amount of extra value the lease extension would add - on top of the usual lease extension price.

This means that extending the lease on the St John's Wood Flat could cost well over £200,000.

There's more information on extending a short lease from the government here.

And the Lease Advisory Service has a calculator, here, that allows you to work out how much it will cost to extend your lease: you'll need to know the ground rent, and the expected value of the property once the extension has gone through.

Be warned, though, that it only works for leases that are currently 50 years or more - so if you're in the market for the St John's Wood flat, you'll need some professional advice.