Eager bidders are being warned to check the leasehold on all auction properties before making a bid.

Lending experts have seen an increase in the number of investors bidding on property only to discover it will cost a fortune to extend the lease.

Leasehold means you own the property for as long as is specified in the lease and have been granted the right to live there by the freeholder, who has complete and absolute ownership of the land. Leaseholders pay ground rent to the freeholder, usually a small amount each year.

Chris Baguley, director at specialist lender Auction Finance Limited, claims even seasoned professionals can make mistakes when they get caught up in a bidding frenzy at auction. He said:

"An investor recently bought a property for cash at a knock down price without checking the terms of the lease. It turned out the property only had eight years left and to extend it beyond this period would have cost the investor a further £180k.

"Many new leases are for up to 999 years but existing leases on properties are usually shorter. Leasehold properties are usually flats, although there are some houses that are leasehold so it's always worth checking.

"I would advise people to avoid buying a property with a lease of less than 60 years. Mortgage lenders are very unlikely to lend for a lease as short as this anyway. Traditional lenders normally want at least 30 years left on the lease after the end of the mortgage term, sometimes a lot longer. As a leaseholder you have the right to extend the lease for a further period or even to buy the freehold if certain criteria are met.

"If you see a property you want to buy consult your solicitor so they can explain the lease in detail. Your solicitor can also check the seller is up to date with ground rent payments before you sign the contract."