Value of Roof Space when purchasing Freehold?

cor89 · 19 February 2018 at 6:31PM

We have been offered the chance to purchase our freehold by the freeholders agent. The property in question is a Victorian terrace conversion divided into 2, two-bedroom flats. Each flat has 950years+ left to run on the lease and pays £15/year ground rent with maintenance split 50:50 on an as and when basis.

I had (perhaps wrongly) assumed that the cost of the freehold would be negligible because of the long lease and peppercorn rent. The valuer appointed by the freeholder has mentioned that he will need to value the roof space. The potential roof space value has never crossed my mind, and at this stage I'm not sure whether to go ahead with the valuation of the freehold (we pay for the valuation firstly, to be reimbursed by the freeholder if the purchase of the freehold goes ahead).

Does anyone have any experience of the potential cost of the freehold once the marriage value of the roof space is taken into account? I'm just after an indication as to whether it will be £100's, £1000's, £10000's. We don't really want to pay for the valuation if it then turns out that the value of the freehold is more than we can pay, especially as we own the ground floor flat so any uplift in value will not even effect our flat!

hazyjo · 19 February 2018 at 6:49PM

So it's staying as two flats? Are you getting confused re freehold - you will still have a lease and it will still be leasehold. I expect they are proposing each flat has a share in a company that owns the freehold (often referred to as 'share of freehold'). I can't see that it would add any value to a converted Victorian terrace.

anselld · 19 February 2018 at 7:15PM

The starting point for the Freeholder would be half the uplift in market value if a conversion was done, for example to convert the top flat to a 3 bed.

They might struggle to realise that in practice so it is a negotiation, but I would think that is where the values will come in. So depends on market where you are.

eddddy · 19 February 2018 at 8:00PM

cor89 wrote: »

....especially as we own the ground floor flat so any uplift in value will not even effect our flat!

That's not really how things would work.

If the upstairs leaseholder wants to convert the roof space, he would have to 'buy' a lease on the roof space from the freeholder.

However, you and he would actually be the joint freeholders (50/50 shares I'd assume)....

So, effectively, he would pay himself 50% of the price, and pay you the other 50% of the price.

(But that might mean lots of arguments/negotiations with your neighbour about what the price of the roof space should be.)

MonkeyDr · 19 February 2018 at 11:21PM

The potential uplift in value will depend on a few things. We are going through the same process, and our valuer looked into
- whether others in stree have converted that space
- if so, how much more are their properties worth
- (assumption if so that planning permission would be ok, but if not then maybe unlikely to get planning anyway)
- what would the costs be

In our case they decided that potential uplift was negligible because a ceiling would need to be lowered and the whole thing would be so prohibitively expensive for very limited extra value, and alternatively building out beyond current roof line wouldn't pass planning.

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Value of Roof Space when purchasing Freehold?

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