How to value a possible mansard

RiskAdverse100

The air space above the building belongs to the freehold company.

If the owner of the top flat wants to build into this airspace he needs to buy it from the freehold company.

As he is extending the area covered by his flat he will also need a licence to carry out the building works and the extent of the existing lease will need to be changed to cover the extra floor.

The difficulty will be in agreeing how much he should pay the freehold company for the airspace.

You need to look at how much the building work is going to cost the top flat owner and the value that this will add to his existing flat. You then need to agree how this profit is to be divided. There is of course no question of a nominal sum being paid of £5k each. Don't forget that when you bought the freehold part of the price paid will have included the value of the airspace which the owner of the top flat wants to have for very little.

If the proposal which has been made is going to work everyone has to benefit and not feel that they are being ripped off. This is the main reason why such schemes often don't work as the top flat owner seems to think that he is going to be able to buy the airspace for a song, build another floor and make a huge profit. Often they genuinely think that the airspace has no value at all! When the freehold company point out that the airspace belongs to them and they want to share in the profit the viability of the whole scheme is brought into question because most of the potential profit disappears.

RiskAdverse100

Apple_2

Thanks RiskAdverse100

If you were in our position, would you just appoint a reputable surveyor/valuer, say the top floor flatowner is responsible for this cost ( with his agreement ) whether it goes ahead or not, and base the valuation on this 'expert's' opinion ?

Did the 50/50% thing I originally posted ring true with you?

silvercar

Yes we'll check the building can take it, but we already know it will. Of the 40 or so houses in the street about 35 have had this done. Struct Eng will be involved but we know this is do-able.

Can you speak to someone else in the street and find out how they did it.

Do you need a majority of the owners of the freehold to agree, or does everyone have to agree.

Apple_2

silvercar wrote:

Can you speak to someone else in the street and find out how they did it.

Do you need a majority of the owners of the freehold to agree, or does everyone have to agree.

I haven't talked to the other houses that have done it, that's a very good idea.

Yes it'll be a majority decision. Four votes - exclude the top floor owner since he's got a vested interest - leaves three. Two of the other three flatowners will have to agree this.

Just thought, they'll have to be a licence for alterations, a counterpart lease and a service charge memorandum - ughh paperwork !

Ian_W

Just as an aside - don't you just love learning from these threads?

Next time I see a rather dodgy dormer extension I shall certainly comment on what a lovely "Mansard" it is - not strictly true from cluttons elequent description - but a real conversation stopper when linked to the Louvre!!

geo555

I think the general rule is 1/3 the increase in value. So if the flat is valued at £150000 as it is and £210000 after the mansard is added, the increase in value is £60000. The owners of the freehold are entitled to £20000 or £5000 each (remember, he also owns a share)

clutton_2

Thanks IanW !! i admit it sounded complex but, it just means that the internal walls of the new roof-flat are Almost vertical as their roof has been rebuilt at a very steep angle, and the ceiling is almost flat - just enough to allow water to run off the roof into gutters - hence an extension in which there is maximum headroom and precious little "ducking under" angled walls which you invariably bash your head on in many attic rooms ! - get it now ? i hope so - these things are hard to express in words.

RiskAdverse100

apple, to try and keep costs down and to try and make sure it all remains amicable it might be good enough to get three local agents to value the flat as is and then ask them to estimate the value of the flat as extended. Chances are one or more of them will have recently sold one of the other 35 flats in the street that have had the mansard extension done.

You then have an idea of the extra value that could be added to the flat.

To work out the profit element you have to calculate how much the work is going to cost to have carried out. If the top flat owner has done his homework he should have some fairly accurate costings and you need to see these. There are then the legal and other costs to take into account.

This gives you a rough profit figure and you have to work out how this should be divided among the four members of the freehold company.

A starting point should be 25% of the profit each but it must of course be borne in mind that it is only the top flat that can be extended in this way and the owner is going to have to do all the work.

This could mean that fair percentages might be 15-20% each for the others and 40% plus for the top flat owner. I do think 50/50 is a little biased in favour of the top flat owner.

Some very gentle negotiation work will be needed as the last thing you want is for everyone to fall out over this. If the scheme is viable then there is no point in not allowing it to go ahead although the profit that results should be fairly distributed.

RiskAdverse100

silvercar

There will also need to be some negotiation over the future service charges. I am guessing you all pay equally at the moment. With this mansard extension you will have flats of different sizes and different values. Also, who will be responsible for roof repairs? the owner of the mansard or the freeholders? Presumable the mansard owner will only own the inside not the outside.

silvercar

I remember a case a few years ago where a freeholder (that was completely separate from the leasholders) built another storey onto the top of a block of flats. The leasholders were only consulted through the planning permission process, not as leaseholders. As leaseholders even the top floor flats, who could have wanted to extend into the loft space like your guy, had no rights. They received no compensation and all the money from the sale of the new flats went to the freeholder. I think it was in Finchley (N. London)