Lease extension question - from a tenant - calculations and terminology

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    Lease extension question - from a tenant - calculations and terminology

    Hi all, I'm here, would appreciate advice and direction from experienced members!

    We are in the process of extending our residential lease and it's been going on for almost a year now - landlord corporation doing its best to prolong and get max profit.
    It's now going to Tribunal.

    Property location: Greater London
    Locked unexpired term: 80 years
    Anticipated value of the flat after extending: £450,000
    Ground rent: £200 for the next 6 years; £400 for the next 25 years; £800 for the next 25 years; £1600 for the next 25 years

    Could someone please help with the questions below?
    (we are drawn into paying 1000s of pounds to solicitors and valuators just for basic simple stuff and I'd appreciate any help!)

    1. What's a good reliable calculator(tion) to come up with an anticipated extension premium? I have tried quite a few calculators online, which show very varying figures.

    2. Deferment rate - is this the same as Reversion rate? What does this mean?

    3. Capitalization rate - what's a good common rate for a Greater London property? Is this something that Tribunal decides or something to provide an evidence of?

    4. Our ground rent is fixed incremental. When putting an average ground rent into calculators, should we calculate the average based on the whole current lease? Or based on the remaining term (80 years) of the lease only, which is a significantly smaller average?

    Appreciate any assistance/advice. Thank you!

    #2
    Send me a PM and I will send you a spreadsheet model which deals with rising ground rents

    1) If the rent is capitalised at 6% and the reversion at 5% then £15.7K would be my answer. If you are confident on the flats value then my answer would be right to within a few hundred pounds either way

    2) Yes use 5%

    3) 6% its rise to £400 in six years time makes the rent reasonable large and attractive and a rate of 6% would be fair

    4) No - you have to work out each stream and then discount it back -the spreadsheet I will send you will deal with that .
    As far as the on-line calculators are concerned they don't deal with rising rents - I would suggest inputing in around £350, bear in mind the rents payable in the next 20 years have a far greater influence than those payable in 20 years plus

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