Varying proportions of f/r price payable by each lessee?

[Pags967]

We have recently received our surveyors report and valuation of the freehold of our block of 4 flats.All leaseholders are currently participating in the purchase of the freehold.It has come to light however that the lease terms of one of the flats is different to the other 3 with a substantially increased ground rent which doubles every 25 years,this has resulted in the surveyor valuing that flats contribution of the freehold value at around 56%

Should the leaseholder with the more expensive lease pay 56% of the freehold purchase price for joining in to acquire a 25% share in the freehold company or are we better of just splitting everything 25% each?

If we go ahead and split 25% or some other proportion such as %age of service charges it seems to me that the flat with the higher proportion of freehold value will gain more in savings of ground rent upon being granted a new 999yr lease.If this leaseholder does not participate because they do not wish to pay 56% of the freehold cost the other three flats will still participate but obviously will end up paying more as a share (1/3 each of freehold purchase price) and will own the lease of this flat through the management company and receive the ground rent.The option to sell the the share of freehold in that flat or grant lease extensions and recoup at a later date is still possible.

I would really appreciate someone who could point me in the right direction as to how to think through this.As a leaseholder in one of the other flats,what should I consider?

Many thx in advance.

[jeffrey]

The best approach is to value each flat:
a. with its existing lease only ;and
b. with a lease extension up to 999yrs.

b minus a shows how much each gains from buying f/r.
Add up all four (b - a) items. Call the total c. Call the f/r price d.
Each person contributes:
d
multiplied by
(b - a, for his/her flat)
divided by
c.

[Pags967]

Thank you very much Jeffrey...when you mean value of the separate flats do you mean market value/surveyors valuation....also how do I estimate the value of a flat with a 999 yr lease?

[jeffrey]

Thank you very much Jeffrey...when you mean value of the separate flats do you mean market value/surveyors valuation....also how do I estimate the value of a flat with a 999 yr lease?
Yes- a professional valuer's market valuation, not yours.

[Markonee1]

As Jeffrey said, the short/expensive lease should pay more for it's 25% share of the freehold.

To visualise it, think of the dwellings being 4 identical detached houses. 3 have long leases at low ground rent, and 1 has a shorter lease with more groundrent to pay.
If all properties come up for sale at the same time then the one property is clearly worth less.

Conversely:
If the four freeholds were sold at auction, then although identical pieces of land, the 3 freeholds with long leases and low groundrents, are worth less in terms of an income stream for an investor, and all things being equal will have lower market value, so cheaper for leaseholder to convert to freehold.
Does that make sense:eek: