Kellsway, Leam Lane, Gateshead, NE10
Gateshead · NE10
Overview
A fully let mixed-use parade holding in Leam Lane, east Gateshead: a convenience store on a 15-year lease with a six-bed HMO above, held on a long leasehold title with 36 years unexpired at £160 per annum ground rent. The passing rent is £45,600 per annum, a 10.5% gross yield at the asking price, with both parts of the income contracted.
Investment highlights
- Convenience store let on a 15-year lease running to November 2038, contracted out of the 1954 Act, with five-yearly upward-only reviews from 2028
- Six-bed HMO upper part committed to at least August 2029, then rolling with six months’ notice either way
- Passing rent of £45,600 per annum across the two leases, 10.5% gross at the asking price
- Freeholder is Gateshead Council, which has previously offered a 99-year regrant at £2,750 per annum ground rent with no premium, terms to be re-confirmed
- Suits cash buyers seeking managed, contracted income with the asset management handled by the leases
The lease extension
The freeholder is Gateshead Council, and a documented route to a long lease already exists. The Council has previously offered, subject to contract, a new 99-year lease on these terms:
- A 99-year term with no premium payable
- Ground rent of £2,750 per annum, reviewed five-yearly upwards only to the higher of market level or RPI
- The tenant covers the Council’s legal costs plus a £350 plus VAT surveyor fee
Two things to weigh. The offer letter dates from May 2021, so the terms need re-quoting on current evidence before they can be relied on. And the new ground rent sits £2,590 a year above the £160 payable today and escalates at each review, so it is a real and growing deduction from net income rather than a free upgrade. What it buys is financeability: a 99-year term restores the mortgageability that the current 36-year lease cannot offer.
The numbers
| Asking price | £435,000 |
| Passing rent | £45,600 per annum |
| Gross yield | 10.5% |
| Tenure | Leasehold, 36 years unexpired, £160 pa ground rent |
| Units | Retail unit + 6-bed HMO |
