How to value Lease Extension?

[Flashback1966]

I bought a Freehold to a flat some years ago. The other leaseholder wants to extend and they only have 57 years left on the lease.

They want an indication from me on the price, but don't want to waste money on surveyors.

There are very few flats for sale. So it is hard to come with a valuation. It is quit possible, that people will pay above the asking price, if it came to the market. Also, with some of the flats for sale, I don't know how many years is left on their lease.

I have n't been to their flat, so don't know if they have done things to extend or do things to add value.

They are neighbours, whilst I don't want to loose out but I don't want to overcharge them. I believe in fairness. I also don't want to pay legal costs. Can this be done with one solicitor?

[Section20z]

With an informal extension it's completely up to you what value you put on it and no surveyor knows any more than you or Zoopla, can't you extrapolate value from when you purchased ?
If the other party has a mortgage then they should be represented but if yours is unencumbered then you don't need to bother.
If you retain some ground rent and only extend to 99 years you could give them a lower premium which may suit if they are selling.

[JK0]

I think any improvements are irrelevant, aren't they?

[Babyspice]

I think any improvements are irrelevant, aren't they?

A discount applies to the premium for any improvements made by the lessee that improves the overall value of the flat. So yes, it is important.

[Section20z]

A discount applies to the premium for any improvements made by the lessee that improves the overall value of the flat. So yes, it is important.

How would a valuer know of any improvements if they've never seen the property before ?

[Babyspice]

How would a valuer know of any improvements if they've never seen the property before ?

from what I have investigated, this would be picked-up as part of the valuation of the property. What prompted me to investigate this, is that I am currently going through a loft conversion application in my leasehold flat (in essence converting from 2 to 3 bed flat). In the future if I need to extend the lease or collectively enfranchise to buy the freehold, I will ensure that my flat is valued as a 2 bed instead of 3 bed, since I was the one who paid for the work. I will make sure that I keep a copy of all the invoices to provide when the time comes.

[sgclacy]

The flat needs to be valued as if the flat had been kept in a perfect time capsule and was presented today with a kitchen and bathroom all as it was in perfect condition but dated

[Gordon999]

The lease extension calculator can give you a rough cost of lease extension ::

https://www.lease-advice.org/calculator/

[Section20z]

The flat needs to be valued as if the flat had been kept in a perfect time capsule and was presented today with a kitchen and bathroom all as it was in perfect condition but dated

For the last two lease extensions I have completed on the valuer didn't even enter flat (admittedly these were during pandemic) and they just used publically available data. I don't recall ever being asked about improvements or bathrooms.

[sgclacy]

For the last two lease extensions I have completed on the valuer didn't even enter flat (admittedly these were during pandemic) and they just used publically available data. I don't recall ever being asked about improvements or bathrooms.

Then you may have lost out slightly, it is for the lessee to argue that the flat has been improved and that tenant's improvements should be taken off the value.

[Section20z]

Then you may have lost out slightly, it is for the lessee to argue that the flat has been improved and that tenant's improvements should be taken off the value.

Ah yes I see your point , but surely at lease inception the whole flat would be brand new so a new kitchen would simply be putting it back to original condition ?