Selling Houses - Freehold
Sep 11th 2003, 9:43 am
#1
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Selling Houses - Freehold
Does anybody know how much value is added on to a house when it is freehold instead of leasehold?
OUr flat is leasehold but we own the freehold for both our one and the one upstairs and we want to sell our flat as a share of freehold and then sell the other share to the flat upstairs.
Our estate agent said it makes a difference in value of each flat however wouldn't put a price on it nor would the solictor. Anyone has any thoughts that would be great.
Cheers
Sarah
OUr flat is leasehold but we own the freehold for both our one and the one upstairs and we want to sell our flat as a share of freehold and then sell the other share to the flat upstairs.
Our estate agent said it makes a difference in value of each flat however wouldn't put a price on it nor would the solictor. Anyone has any thoughts that would be great.
Cheers
Sarah
Sep 11th 2003, 12:14 pm
#2
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Sarah,
can't believe that the estate agent won't give a value - surely its his job! i'd try a different one if i were you (valuations are usually free after all)
in the meantime this may give some background info as to how the value is supposed to be obtained but it wont contain any hard figures (i assume its still current)
http://www.odpm.gov.uk/stellent/grou...use_601799.pdf
Bananaman
can't believe that the estate agent won't give a value - surely its his job! i'd try a different one if i were you (valuations are usually free after all)
in the meantime this may give some background info as to how the value is supposed to be obtained but it wont contain any hard figures (i assume its still current)
http://www.odpm.gov.uk/stellent/grou...use_601799.pdf
Bananaman
Sep 11th 2003, 12:27 pm
#3
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Re: Selling Houses - Freehold
Hi Sarah,
I guess the solicitor is reluctant to put a value on because he deals with legalities and knows less about market values, while the estate agent is unable/unwilling to interpret the legalities in the terms of the lease to allow him to put a value on it.
You probably need a summary of the terms of the lease for the estate agent to be able to put a value on it. I'm thinking of info such as whether there are restrictive covenants in the lease and yearly monies owed to the freeholder (currently yourself).
Here is a link that maybe of some help....
LEASE - The Leasehold Advisory Service
Also, I've seen leasehold issues raised in the uk legal newsgroup, you may want to put a post up there.
young_lad
I guess the solicitor is reluctant to put a value on because he deals with legalities and knows less about market values, while the estate agent is unable/unwilling to interpret the legalities in the terms of the lease to allow him to put a value on it.
You probably need a summary of the terms of the lease for the estate agent to be able to put a value on it. I'm thinking of info such as whether there are restrictive covenants in the lease and yearly monies owed to the freeholder (currently yourself).
Here is a link that maybe of some help....
LEASE - The Leasehold Advisory Service
Also, I've seen leasehold issues raised in the uk legal newsgroup, you may want to put a post up there.
young_lad
Sep 11th 2003, 1:44 pm
#4
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Originally posted by bananaman
Sarah,
can't believe that the estate agent won't give a value - surely its his job! i'd try a different one if i were you (valuations are usually free after all)
in the meantime this may give some background info as to how the value is supposed to be obtained but it wont contain any hard figures (i assume its still current)
http://www.odpm.gov.uk/stellent/grou...use_601799.pdf
Bananaman
Sarah,
can't believe that the estate agent won't give a value - surely its his job! i'd try a different one if i were you (valuations are usually free after all)
in the meantime this may give some background info as to how the value is supposed to be obtained but it wont contain any hard figures (i assume its still current)
http://www.odpm.gov.uk/stellent/grou...use_601799.pdf
Bananaman
Thank guys, this stuff is really useful. No the estate agent was happy to say that selling our flat as freehold would add 10-15% to the selling price but wouldn't say how much the freehold is worth on its own - after reading those newsgroups I can see this is a very complicated issue!
Sep 11th 2003, 2:03 pm
#5
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Originally posted by Sarah2004
Thank guys, this stuff is really useful. No the estate agent was happy to say that selling our flat as freehold would add 10-15% to the selling price but wouldn't say how much the freehold is worth on its own - after reading those newsgroups I can see this is a very complicated issue!
Thank guys, this stuff is really useful. No the estate agent was happy to say that selling our flat as freehold would add 10-15% to the selling price but wouldn't say how much the freehold is worth on its own - after reading those newsgroups I can see this is a very complicated issue!
Surely that means that it's worth 10-15% of the value of the falt then?
Wether the people in the other flat are prepared to pay that is another matter
Sep 11th 2003, 2:47 pm
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Originally posted by cadman
Surely that means that it's worth 10-15% of the value of the falt then?
Wether the people in the other flat are prepared to pay that is another matter
Surely that means that it's worth 10-15% of the value of the falt then?
Wether the people in the other flat are prepared to pay that is another matter
If only it were that simple! From what I can gather from the legal newsgroups is the freehold on a leasehold flat (with lease of less than 85 odd years) is worth 10-20 times the ground rent per year plus the 'marriage value' which is the increase in the value of the flat once the flat is freehold, so 50% of the 10-15%. And yes it does depend whether the guy upstairs wants to pay for it, at least we have somewhere to start now
Sep 11th 2003, 5:53 pm
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It may be worth more to a prospective buyer, it may not. You need to consider a few possibilities:
- a 999 year or similar leasehold (with a few years gone) is more or less equivalent to freehold in most people's eyes. Closer 999 years becomes to expiry, more the freehold matters and is valuable.
- you may have the right to buy the freehold if you are a leaseholder (I know this does not apply to the OP) and because this is a straightforward process and there are usually no particular obstacles, usually the owner of the freehold is realistic abut the achievable price. I think 10% is unrealistic, for a flat worth (say) GBP250K I think the freehold would typically cost a few thousand pounds (ie closer to 4K than 25K).
- often the prospective buyer's interest in freehold vs leasehold matters depends on whether the management company managing the flats (say) is acting fairly and annual costs are within the normal range. Ie a rogue freeholder-appointed manco will often prompt leaseholders to buy the freehold so that they can manage their own affairs. But this year the 2002 Right to manage legislation comes into force and it is unlikely we will see such bad abuse by freeholder-appointed mancos in future. If it does continue, it will be quick and simple for leaseholders to sack the freeholder's manco and manage their own affairs or appoint their own manco. Therefore freehold will matter less.
- a 999 year or similar leasehold (with a few years gone) is more or less equivalent to freehold in most people's eyes. Closer 999 years becomes to expiry, more the freehold matters and is valuable.
- you may have the right to buy the freehold if you are a leaseholder (I know this does not apply to the OP) and because this is a straightforward process and there are usually no particular obstacles, usually the owner of the freehold is realistic abut the achievable price. I think 10% is unrealistic, for a flat worth (say) GBP250K I think the freehold would typically cost a few thousand pounds (ie closer to 4K than 25K).
- often the prospective buyer's interest in freehold vs leasehold matters depends on whether the management company managing the flats (say) is acting fairly and annual costs are within the normal range. Ie a rogue freeholder-appointed manco will often prompt leaseholders to buy the freehold so that they can manage their own affairs. But this year the 2002 Right to manage legislation comes into force and it is unlikely we will see such bad abuse by freeholder-appointed mancos in future. If it does continue, it will be quick and simple for leaseholders to sack the freeholder's manco and manage their own affairs or appoint their own manco. Therefore freehold will matter less.
