Can someone calculate my premium for me?

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    Can someone calculate my premium for me?

    Hi,

    I have seen some calculations on the forum for leases premiums however I cannot get my head around it. Can someone please help me and calculate my premium for me? Any help will be much appriciated.

    My remaining leases length is 27 years
    Grd rent is 10 per annum
    Value after leases extention is 190k

    Regards

    Imran

    #2
    The three steps required to value the premium are:-

    1) Capitalisation of the rent at say 7.25% = £140

    2) Value of the reversion deffered back at 5% over 27 years=

    £190k/(1.05^27) = £50,891

    3) Marriage value. Relativity at 27% could be around 57.5%

    £190k X (100%-57.5%) = £80,750 less £140 less £50,891 = £29,719

    50% of £29,719 = £14,860

    Premium = £140+£50,891+£14,860 = £65,891

    ie about 34% of the value of the flat if it had a long lease

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