Freehold Valuation

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    Freehold Valuation

    Does anyone have any experience/knowhow in valuing a freehold? I presume (?) that this can be done with a formula?

    The details are as follows:
    - Freehold Building Converted into 2 Flats.
    - Both leases = 125 yrs from Aug06.
    - Both Ground rents = £150 (25yrs), £250 (25yrs), £400 (25yrs), £600 (25yrs), £800 (25yrs).
    - Both flats have value = £395k.
    - Location is Wandsworth, London SW18.

    All help much appreciated.

    Many thanks,
    Rich

    #2
    Dear Rich,

    There is a statutory calculation although it is not straightforward by any means and covers two pages of A4.

    For information on how the asset is calculated, please visit the Pro-Leagle website on:-

    http://www.proleagle.com/collectiveenfranchisement3.htm

    My charges are £75.00 (inc. VAT) per Valuation Report.

    Best wishes,


    CORINNE TUPLIN
    SOLICITOR
    PRO-LEAGLE
    www.proleagle.com
    CORINNE TUPLIN
    SOLICITOR
    PRO-LEAGLE
    www.proleagle.com

    ___________________
    Please note that any comments made are personal opinion and do not constitute legal advice.

    For Service Charge Disputes, you may wish to use Pro-Leagle's online Service Charge Dispute Analyser: http://www.proleagle.com/servicecharges.htm

    Comment


      #3
      Corinne,

      Thanks for your reply.

      Where do i get a copy of the statutory calculation? I understand that it may not be straightforward but as well as getting a value I am also interested in learning/understanding how this valuation works - Rather than just taking on trust a valuation of say £6k.

      Having looked at your site it says that calc is predominantly based upon:
      - ground rent
      - years you have left to run on the lease
      - area in which the property is located
      - number of leaseholders in the property

      Which fortunbately is info that I have to hand.

      And I understand that from your site that I would disregard Marriage Value as the leases are >80yrs.

      In particular i am most interested in what effect the "area in which the property is located" has? And why this effects freehold value?

      Many thanks,
      Rich

      Comment


        #4
        Originally posted by RichA View Post
        Does anyone have any experience/knowhow in valuing a freehold? I presume (?) that this can be done with a formula?

        The details are as follows:
        - Freehold Building Converted into 2 Flats.
        - Both leases = 125 yrs from Aug06.
        - Both Ground rents = £150 (25yrs), £250 (25yrs), £400 (25yrs), £600 (25yrs), £800 (25yrs).
        - Both flats have value = £395k.
        - Location is Wandsworth, London SW18.

        All help much appreciated.

        Many thanks,
        Rich
        If you send me an e-mail I will send you a excel spreadsheet which can value this. As there is no marriage value to consider as 80+ yrs remaining there are THREE variables.

        The discount rate for ground rent which would be around 8% (this may vary from 7.5% to 8.5%) but its not worth getting into an argument over as its effect on the value is small.

        The deferment rate for the reversion has been strongly suggested by the LVT to be 5% but in view of the very long lease term you may be able challenge this. But I have used 5% in the valuation

        The value of the flats, again in view of the length of the lease not that crucial.

        I have assumed both flats total £395,000 and both ground rents to come to a total of £150 etc. If the figure you have quoted are per flat simply double the figure.

        Based on the info you set out and using a capitalization rate of 8% and a deferment rate of 5% I believe the value to be £3211.

        My email address is stephen@clacy.com and I will send you the spreadsheet

        Comment


          #5
          Stephen,

          Many thanks for the valuation & your offer of emailing me a spreadsheet.

          I have sent you an email.

          Regards,

          Rich

          Comment

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