View Full Version : Selling freehold

RichA

16-06-2008, 15:34 PM

I wish to sell a freehold to the two leaseholders.

Would this be the appropriate basis for valuation:

Discount rate for income: 7.5%

Discount rate for reversion: 5.0%

Using the parameters below I have calculated the value of purchasing the freehold for the two leaseholders as I wish to use a fair price as the start of any discussions.

Leaseholders: 2

Location: Wandsworth, SW18, London

Property Value: £400,000 each

Term: 125 years

Ground Rent 0-25yrs: £150 each

Ground Rent 26-50yrs: £250 each

Ground Rent 51-75yrs: £400 each

Ground Rent 76-100yrs: £600 each

Ground Rent 101-125yrs: £800 each

Calculated Price

Value of ground rent: £2,285 each

Value of reversion: £898 each

Total: £3,138 each.

Please can you let me know if this makes sense. If this were to go to the LVT what would they do differently???

Many thanks for any help.

Richard

jeffrey

16-06-2008, 15:49 PM

1. Are these two flats or houses?

2. Do they want to buy, or do you want to sell?

3. If it's they, have they served a formal Notice on you [1993 Act]?

RichA

16-06-2008, 15:54 PM

Jeffrey,

1. Are these two flats or houses?

- 2 flats within a conversion (of 2).

2. Do they want to buy, or do you want to sell?

- I am considering selling and am going to offer to them (informally at first).

3. If it's they, have they served a formal Notice on you [1993 Act]?

- No notice has been served either way.

Richard

jeffrey

16-06-2008, 16:06 PM

Your offer should comply with one of the LTA 1987 procedures; see s.5 and the sections following.

RichA

16-06-2008, 16:17 PM

Jeffrey,

I wish to start a dialogue with the leaseholders first of all. I am happy to serve the requisite notices once I have ascertained their interest.

i.e.

Serve notice - so that they can buy (necessary?)

Serve notice - so I can sell at auction

No notice - keep the freehold.

Richard

sgclacy

16-06-2008, 16:22 PM

I wish to sell a freehold to the two leaseholders.

Would this be the appropriate basis for valuation:

Discount rate for income: 7.5%

Discount rate for reversion: 5.0%

Using the parameters below I have calculated the value of purchasing the freehold for the two leaseholders as I wish to use a fair price as the start of any discussions.

Leaseholders: 2

Location: Wandsworth, SW18, London

Property Value: £400,000 each

Term: 125 years

Ground Rent 0-25yrs: £150 each

Ground Rent 26-50yrs: £250 each

Ground Rent 51-75yrs: £400 each

Ground Rent 76-100yrs: £600 each

Ground Rent 101-125yrs: £800 each

Calculated Price

Value of ground rent: £2,285 each

Value of reversion: £898 each

Total: £3,138 each.

Please can you let me know if this makes sense. If this were to go to the LVT what would they do differently???

Many thanks for any help.

Richard

Richard your calculation on income is not quite right; at 7.5% it is £2,006 however the figure for the reverion is correct.

OneTwo

16-06-2008, 16:46 PM

Two leaseholds valued at £400000 each in Wandsworth? Snap! (nearly - I'm in Balham)

For your interest I have recently employed a Surveyor to calculate the value of my freehold and she used 6% as the discount rate for income. The same surveyor used 7% when doing a lease extension.

Regards

RichA

16-06-2008, 17:03 PM

Richard your calculation on income is not quite right; at 7.5% it is £2,006 however the figure for the reverion is correct.

Not sure what's gone on there. I thought it was a PV calc. I have assumed payment at end of year)

00 - 25 yrs @ £150 = £1,672

26 - 50 yrs @ £250 = £457

51 - 75 yrs @ £400 = £120

76 - 100yrs @ £600 = £29

101- 125yrs @ £800 = £6

Total = £2,285

Anyhow, £2,285 v £2,206 is not a huge difference so I am in the right ball park to start the discussions.

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