--- name: lease-impact-advisor title: Lease Impact Advisor description: Assess leasehold property saleability and mortgage impact. Use when an estate agent or property professional asks about lease length impact, whether a lease is too short, which lenders will accept a lease, lease extension costs, marriage value, or saleability of a leasehold property. Also triggers on questions about short leases, lease expiry, buyer pool restrictions, or price impact of lease length. author: MoverlyLtd author_url: https://github.com/MoverlyLtd/conveyancing-toolkit/tree/master/lease-impact-advisor license: MIT version: 0.1.0 execution_mode: open jurisdiction: gb practice: real-estate language: en --- # Lease Impact Advisor ## Response Rules — Always Include **DO:** - When discussing lease extension for leases ABOVE 80 years: always state that **no marriage value applies** (marriage value only kicks in strictly below 80 years per Leasehold Reform Act 1993). At exactly 80 years, marriage value does NOT apply. - Always mention **specific lender thresholds** by name. - Calculate end-of-term requirements accurately. If a lender requires "mortgage term + 30 years remaining at the end of the term", and the mortgage is 25 years, the lease must be 55 years at commencement. If the lease is 72 years, it passes (72 - 25 = 47, which is > 30). - If the lease clears the lender's threshold comfortably (e.g. 95 years against a 70-year minimum), state unequivocally that it is **ELIGIBLE** and do not over-hedge or manufacture risks. - When the lease is above most lender thresholds: always note that extension is **still worthwhile for future value protection**. **DON'T:** - Don't claim marriage value applies for leases above 80 years — it only applies below 80 - Don't say "lenders typically require 70+ years" without naming specific lenders - Don't treat safe-for-lending leases as requiring no action — always advise on future value protection Assess the impact of lease length on property saleability, mortgage availability, and value — from an estate agent's perspective. ## When to use - Estate agent valuing or listing a leasehold property - Vendor asking whether to extend before marketing - Buyer asking about mortgage availability on a short lease - Anyone asking "will this lease length be a problem?" ## Required inputs Ask the user for: 1. **Current unexpired lease term** (years remaining) — REQUIRED 2. **Property value** (£) — needed for extension cost estimate 3. **Mortgage term** (years, default 25) — for lender eligibility 4. **Property type** — flat or house (affects some lender rules) If the user only gives years remaining, provide the saleability assessment and lender summary. Ask for property value if they want extension cost estimates. ## Assessment process ### Step 1: Run the calculator ```bash bash scripts/lease-calc.sh [property_value] [mortgage_term] ``` This returns: risk band, lender eligibility, extension cost estimate, and saleability impact. ### Step 2: Interpret for the audience Frame everything from the estate agent's perspective — saleability, buyer pool, pricing impact. **DO NOT** give legal advice. Frame recommendations as "your conveyancer should advise on..." or "we'd recommend discussing with a specialist lease extension solicitor." ### Step 3: Lender eligibility detail Cross-reference years remaining against lender thresholds. For each major lender, state clearly: ELIGIBLE, MARGINAL (may need referral), or INELIGIBLE. If years remaining minus mortgage term is the binding constraint, say so: "With a 25-year mortgage, the lease would have [X] years at redemption — below [Lender]'s minimum of [Y] years at end of term." ### Step 4: Extension guidance If extension is advisable, explain: - **Statutory route** (Section 42 notice) — requires 2 years ownership, adds 90 years, reduces ground rent to peppercorn - **Informal route** — negotiate with freeholder, no ownership requirement, terms negotiable - **Assign benefit** — seller starts statutory process, assigns to buyer on completion - **Cost components**: diminution in landlord's interest + 50% marriage value (if under 80 years) + landlord's costs - **Leasehold and Freehold Reform Act 2024** — now law but not fully in force. Marriage value is set to be abolished but hasn't taken effect yet. Advise based on current law. ## Risk bands | Band | Years remaining | Impact | |------|----------------|--------| | **GREEN** | 90+ years | No impact. All lenders accept. Full buyer pool. | | **AMBER** | 80–89 years | Most lenders accept but approaching thresholds. No marriage value. Recommend extending before it drops below 80. | | **RED** | 70–79 years | Marriage value applies. Buyer pool restricted. Some lenders decline. Price discount 5-15%. Extension strongly advised before marketing. | | **CRITICAL** | Under 70 years | Most lenders decline. Severe buyer pool restriction — cash buyers or specialist lenders only. Price discount 15-30%+. Extension essential. | | **UNMORTGAGEABLE** | Under 55 years | Virtually no mainstream lenders. Cash buyers only. Significant price discount. Some properties become functionally unsaleable without extension. | ## Lender thresholds Indicative minimum unexpired lease terms for major lenders, from each lender's published lending criteria. The script has these built in, but for reference. Lenders change these without notice: always confirm the current figure with the lender or its published criteria before relying on it. | Lender | Minimum at completion | End-of-term requirement | Notes | |--------|----------------------|------------------------|-------| | Nationwide | 55 years (90 for >85% LTV second-hand flat) | 30 years at end of term | Most flexible mainstream | | NatWest | No fixed minimum | Mortgage term + 30 years | Effectively ~55 for 25yr mortgage | | HSBC | 50 years after mortgage term | Must refer if <85 years | Subject to valuer opinion | | Barclays | 70 years | — | Prestige London estates may get discretion | | Halifax | 70 years | — | — | | Lloyds | 70 years | — | — | | TSB | 70 years | 30 years at end of term | — | | Santander | Varies | 30 years (repayment), 50 years (interest-only) at end | Complex — must refer if <82 years | | Coventry BS | 70 years (80 for lifetime/equity release) | — | — | | Virgin Money | 85 years | — | Must extend before completion if shorter | ## Key legal context - **Marriage value**: applies when lease is under 80 years. Leaseholder pays freeholder 50% of the increase in property value from the extension. Can add thousands to the cost. Set to be abolished by Leasehold and Freehold Reform Act 2024 but NOT YET in force. - **Two-year rule**: statutory right to extend (Section 42) requires 2 years ownership. Informal negotiation has no such requirement. - **Ground rent**: new leases post-June 2022 must be peppercorn. Existing ground rent provisions (especially doubling clauses) affect lender appetite. Draft Leasehold and Commonhold Reform Bill proposes £250 cap. - **Building Safety Act 2022**: qualifying leaseholders in buildings over 11m may have protections against remediation costs. Doesn't directly affect lease length but affects overall lender appetite.