Should my house be valued as if it’s never had a bathroom and modern kitchen for the purpose of buyi

topoftherock

Should my house be valued as if it’s never had a bathroom and modern kitchen for the purpose of buying the freehold?             Hi all, I’m interested in buying the freehold of my terraced house in the South Wales valleys . It’s a leasehold property  on an extended 50-year lease, £1k per year ground rent and there are 40 years remaining. I’ve read over the years, that you need to read the contract to find out how the freeholder’s valuer would value the property for the sake of purchasing the freehold. When my house was built in 1916, there was never a bathroom (the toilet was and is still  outside in the garden, but it has been abandoned for decades), and of course there was never a modern kitchen fitted (which is still pretty much the same). Apart from knocking down and replacing  mortar walls, the house is structurally more or less the same as it was when it was built (In addition, there is now a bathroom which was originally a bedroom). I’ve recently received the lease and contract of our 50-year extension from the land registry, and I can’t see anything in particular that refers to the bathroom or kitchen (unless I’ve missed something). Therefore, does the freeholder’s valuer have to value the property (for purchasing the freehold) as if it doesn’t have a bathroom and a modern kitchen?  Thanks   

eddddy

There are 2 different types of valuation, but based on what you say - it's likely that the valuation calculation should ignore any improvements made by the leaseholder.
There's more details here: https://www.lease-advice.org/advice-guide/leasehold-houses-valuation/

But conversely, the valuation calculation will assume that all covenants have been observed. i.e. If the house has been allowed to fall into disrepair (in breach of the lease covenants), it will be valued as though the house has been kept in good condition.

[Deleted User]

And again - could posters please break up walls of text with punctuation and paragraphs 🤨🤷‍♀️🤦‍♀️

AdrianC

topoftherock said:

Should my house be valued as if it’s never had a bathroom and modern kitchen for the purpose of buying the freehold?

Hi all, I’m interested in buying the freehold of my terraced house in the South Wales valleys . It’s a leasehold property  on an extended 50-year lease, £1k per year ground rent and there are 40 years remaining. 

I’ve read over the years, that you need to read the contract to find out how the freeholder’s valuer would value the property for the sake of purchasing the freehold. 

When my house was built in 1916, there was never a bathroom (the toilet was and is still  outside in the garden, but it has been abandoned for decades), and of course there was never a modern kitchen fitted (which is still pretty much the same). Apart from knocking down and replacing  mortar walls, the house is structurally more or less the same as it was when it was built (In addition, there is now a bathroom which was originally a bedroom). 

I’ve recently received the lease and contract of our 50-year extension from the land registry, and I can’t see anything in particular that refers to the bathroom or kitchen (unless I’ve missed something). 

Therefore, does the freeholder’s valuer have to value the property (for purchasing the freehold) as if it doesn’t have a bathroom and a modern kitchen?  Thanks   

Why on earth would you ignore what's there now, and value the property based on some theoretical condition over a century ago?

topoftherock

eddddy said:

There are 2 different types of valuation, but based on what you say - it's likely that the valuation calculation should ignore any improvements made by the leaseholder.
There's more details here: https://www.lease-advice.org/advice-guide/leasehold-houses-valuation/

But conversely, the valuation calculation will assume that all covenants have been observed. i.e. If the house has been allowed to fall into disrepair (in breach of the lease covenants), it will be valued as though the house has been kept in good condition.

Hi eddddy, many thanks for your reply. Looking at the link you sent me, I’m almost certain that the special valuation basis would be used because our original 99-year lease was extended to a new 50-year lease under the leasehold reform act 1967 as amended. I have found the following covenant “to keep the demised premises including the drains and sanitary and water apparatus and all fixtures and additions thereto in good and tenantable repair and condition throughout the term and to yield up the same in such repair and condition at the determination of the tenancy”. So, I understand that the house needs to be kept in good condition, and we can’t expect to get a cheaper freehold because of neglect. However, As there are no covenants stating that changing the house structurally will affect the asking price (e.g extensions, conservatory etc), I’ve read that the house still needs to be valued as if it doesn’t have a bathroom. Kind regards 

topoftherock

AdrianC said:

topoftherock said:

Should my house be valued as if it’s never had a bathroom and modern kitchen for the purpose of buying the freehold?

Hi all, I’m interested in buying the freehold of my terraced house in the South Wales valleys . It’s a leasehold property  on an extended 50-year lease, £1k per year ground rent and there are 40 years remaining. 

I’ve read over the years, that you need to read the contract to find out how the freeholder’s valuer would value the property for the sake of purchasing the freehold. 

When my house was built in 1916, there was never a bathroom (the toilet was and is still  outside in the garden, but it has been abandoned for decades), and of course there was never a modern kitchen fitted (which is still pretty much the same). Apart from knocking down and replacing  mortar walls, the house is structurally more or less the same as it was when it was built (In addition, there is now a bathroom which was originally a bedroom). 

I’ve recently received the lease and contract of our 50-year extension from the land registry, and I can’t see anything in particular that refers to the bathroom or kitchen (unless I’ve missed something). 

Therefore, does the freeholder’s valuer have to value the property (for purchasing the freehold) as if it doesn’t have a bathroom and a modern kitchen?  Thanks   

Why on earth would you ignore what's there now, and value the property based on some theoretical condition over a century ago?

Hi there, because I’ve read about this (for the purpose of buying the freehold) and want to confirm if it’s correct. 

eddddy

AdrianC said:
Why on earth would you ignore what's there now, and value the property based on some theoretical condition over a century ago?

The theory of 'the special valuation method'  is that the freeholder shouldn't benefit from improvements made by the leaseholder(s) and paid for by the leaseholder(s) during the term of the lease.

For example, if a freeholder leases out a very basic house, and then the leaseholder installs and pays for a luxury kitchen, luxury bathroom, a new en-suite, central heating, luxury flooring - which increases the market value of the house - the freeholder can't charge more for the freehold of the house as a result of the leaseholder's work.

In the OP's case, it sounds like the house was originally leased by the freeholder with an outside toilet, and a previous leaseholder has paid for a new bathroom to be installed inside the house (which has probably increased the market value).


(But, for example, it might also depend on what the freeholder/leaseholder agreed when consent was given for alterations etc.)

topoftherock

eddddy said:

AdrianC said:
Why on earth would you ignore what's there now, and value the property based on some theoretical condition over a century ago?

The theory of 'the special valuation method'  is that the freeholder shouldn't benefit from improvements made by the leaseholder(s) and paid for by the leaseholder(s) during the term of the lease.

For example, if a freeholder leases out a very basic house, and then the leaseholder installs and pays for a luxury kitchen, luxury bathroom, a new en-suite, central heating, luxury flooring - which increases the market value of the house - the freeholder can't charge more for the freehold of the house as a result of the leaseholder's work.

In the OP's case, it sounds like the house was originally leased by the freeholder with an outside toilet, and a previous leaseholder has paid for a new bathroom to be installed inside the house (which has probably increased the market value).


(But, for example, it might also depend on what the freeholder/leaseholder agreed when consent was given for alterations etc.)

Hi Eddddy, the house has been in our family since the old lease started. the old lease (1916 to 2010) was in my grandmother’s name and the new lease is now in my name (2010-2060 on an extended 50-year lease).  The bathroom was installed back in the 80s (which was originally a bedroom).  

topoftherock

***The old lease was 1911 to 2010 sorry***