Share of Freehold - how to value?

botchjob

I wonder if any of you wise people might have knowledge of how much a share of freehold is worth? The basics are:

2 flats in a town house. We own freehold. The new buyer of the basement flat (leasehold) has asked about buying a share of the freehold. We’re happy with that in principle. How much though?

Lease has 100 years to run. Nominal ground rent of £25 a year, plus a £50 a year service charge. Basement flat is being sold for around £300k

They’ve offered £1,000 which seems somewhat low. Is the only way to get a proper valuation to pay for a surveyor to make a calculation and then negotiate from there?

Also, I assume that convention has it that the buyers side would be responsible for picking up all legal costs, valuation, etc?

Any advice would be gratefully received.

Here_to_help.

Dear Botchjob

Freehold valuation looks principally at the value of the ground rent and what getting the flats back at the end of the leases is worth today. If the leases have less than 80 years to run then there can be an additional element called marriage value.

Buying into the freehold can be an awakward calculation , and if all teh lease have 100 or so years to run it isn't on the face of it a very valuable freehold.

Short of hiring a surveyor you can get some useful guidance from the Leasehold Advisory Service (LEASE) and their valuation guide'Collective Enfranchisement - Valuation' and there are also tribunal decisions (1993 Act) on LEASE's website where leaseholders have forced the sale of the freehold and had the price determined independently. You may see contemporary cases with similar lease lengths etc as a useful reference. If in doubt you can call on 020 7374 5380.

Hope this helps.

Richard_Webster

Does OP just own the freehold and not the leases of either flat?

If so why share with someone else? Either sell the whole thing to both flat owners and let them get on with it or possibly sell it to just one of them - but why have the hassle of sharing the freehold with someone else?

You lose control and will be beholden to them.

Leasehold_Solutions

Richard is right I believe. As the freeholder you are below the threshold at which the new flat owners can compel you to sell the freehold and you are better off practically and commercially retaining the sole ownership of the freehold in the long-run.

Indeed they would need to pay your legal fees, certainly under a statutory route, which does not apply in your case.

Their offer does on the face of it seem a little low. But of course they would offer below the market value! However, they are probably in the right order of expense.

Get some initial advice from some specialist lawyers and surveyors. Their not-for-profit Association of Leasehold Enfranchisement Practitioners (search for ALEP in your favourite search engine) web site has a member listing.