I am negotiating with the landlord’s surveyor for a 90 year lease extension on a flat in W10, which has 73.13 years to run.
We both agree it has an unimproved market value with a long lease of £272,000 as of April 2008. We fall out as regards the marriage value of the flat. The surveyor claims that the value of the existing lease is £240,720, i.e. a relativity of 88.5%, all without any justification, although he then goes on to say he is prepared to round it up to 89%. He doesn’t agree with the use of the Beckett and Kay relativity graphs.
My question is how does one calculate the present value of the flat? With the market as it is there are effectively no comparators to attempt a “No act world” calculation. The asking price was around £260,000 as valued by two separate estate agents. We paid £250,000, partly for stamp duty considerations and partly accepting that we would have to spend a few thousands to bring it back into a habitable, “unimproved” condition (there was no hot water, etc).
A subsidiary question is that the surveyor has used a value that he calls the virtual freehold value of £274,720 (long lease value + 1%) to calculate the reversion, which inflates the premium. We are not buying into the freehold! Is this justifiable?
Many thanks for advice
We both agree it has an unimproved market value with a long lease of £272,000 as of April 2008. We fall out as regards the marriage value of the flat. The surveyor claims that the value of the existing lease is £240,720, i.e. a relativity of 88.5%, all without any justification, although he then goes on to say he is prepared to round it up to 89%. He doesn’t agree with the use of the Beckett and Kay relativity graphs.
My question is how does one calculate the present value of the flat? With the market as it is there are effectively no comparators to attempt a “No act world” calculation. The asking price was around £260,000 as valued by two separate estate agents. We paid £250,000, partly for stamp duty considerations and partly accepting that we would have to spend a few thousands to bring it back into a habitable, “unimproved” condition (there was no hot water, etc).
A subsidiary question is that the surveyor has used a value that he calls the virtual freehold value of £274,720 (long lease value + 1%) to calculate the reversion, which inflates the premium. We are not buying into the freehold! Is this justifiable?
Many thanks for advice
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