Valuation while renting quant property from public body

cryvate

Section62 said:

cryvate said:

You were "wrong" in the sense that the person I spoke to, though not having the "direct" authority, had a good idea of how this could come about and how the process would work, and had informal agreement from others on the relevant board/committees that this is a good idea, and this has borne fruit so far.

Again, I think you've misunderstood what I actually said, which was -

"Before spending too much investigating this idea, it would be worthwhile considering whether those who have indicated an interest in selling actually have the authority to make that decision on behalf of the body..."

In other words, there was a risk of spending a considerable sum on professional advice, only to find out there was no official plan to sell the property.  I - and members of the forum - have no idea whether or not the person you were talking to was someone who knew what the situation was, hence my advice to you (being the person with more information) to consider the veracity of what you were being told by them.  That isn't a "right" or "wrong" thing to do... just an important thing to consider before spending a lot of your own money.

cryvate said:

What do you think about their position though, I would be interested:
- I think the public body is relatively cash poor with little way of raising revenue (they are trying to increase licence fees at the moment)
- Their previous sell of something similar took years and had to take a discount (from ~1,000k to ~625k I think)
- The rent they are getting from the properties (1250 + ~1000) from the properties seems poor relative to the valuation (~425k each) and there is quite a lot of maintenance too

If it is the organisation I think it is, £425k isn't a significant amount in comparison to its asset-base.

Public bodies have to account separately for income and expenditure in terms of 'capital' and 'revenue'. There are rules governing the sale of capital assets (e.g. these cottages) in order to cover revenue costs - therefore selling property isn't necessarily the money-making opportunity you perceive it to be.

On your third point, in assessing the relationship between income on these properties and their valuation, you need to bear in mind the organisation didn't have to pay that money to acquire the property - they effectively got them for 'free'.  The role of the organisation extends beyond maximising revenue receipts on the assets it is guardian for - there are also considerations relating to the long-term sustainability of the organisation and preservation and protection of heritage features.  The organisation (if it is who I think it is) has also experienced some controversy relating to previous decisions - so will probably have some regard to how the sale of these properties would look in 'PR' terms.

Therefore it is really difficult to predict their decision making process.

cryvate said:

Of course, the latter is a negative for me as well, but it seems to me, that the current situation is leaving the public body poorer every month (especially after agency cuts on the rents as well, they are "fully managed" by a high street broker).

I don't think they would see this as a significant concern. The 'loss' they might be making on these properties is trivial in comparison to the costs involved in maintaining their total asset-base.  Any income from rentals might be viewed as a bonus.

cryvate said:

Do you think the public body will do a "take it or leave it" offer? Do you think they will increase their offer relative to the valuation as we are eager or simply stick to them?

I think they will follow their policies and legislation on disposal of assets - there will be auditors whose job it is to ensure this has been done. However, if they do want to sell, you should have a reasonable expectation of agreeing a 'fair' sale price.

cryvate said:

One advantage is that an estate agent (fee) will be avoided.

They could (and possibly would) avoid that by marketing the property directly - for example by placing adverts in suitable publications or online.  There is no obligation to pay an estate agent to sell your property.

Very true, and I am glad I have not spent money yet. Of course I will have to pay for a surveyor and there will be things coming out of that, but the house buying process (when using a mortgage, I guess in theory if you use cash it might be difference) has got many assurances built-in that means many worries I have will be caught regardless of whether I think about them or not and also the property isn't that crazily weird.

That all sounds reasonable, to be honest, happy to pay a "fair" price, just kind of hard to determine what it is, though the valuations I have received seem fair (and are within my budget).

I would be intrigued to know what "controversy"/bad PR you are thinking of! I agree this public body has not always been perfect, but I do not think they have had massive problems (I have been in the area for 10 years).

Section62

cryvate said:

I would be intrigued to know what "controversy"/bad PR you are thinking of! I agree this public body has not always been perfect, but I do not think they have had massive problems (I have been in the area for 10 years).

I wouldn't want to get into that on a public forum, suffice to say the organisation's wikipedia entry has a section entitled "Controversies" which details just a few of the more well-known ones.

cryvate

Section62 said:

cryvate said:

I would be intrigued to know what "controversy"/bad PR you are thinking of! I agree this public body has not always been perfect, but I do not think they have had massive problems (I have been in the area for 10 years).

I wouldn't want to get into that on a public forum, suffice to say the organisation's wikipedia entry has a section entitled "Controversies" which details just a few of the more well-known ones.

Interesting! I will have to have a dig in Wikipedia which one it is, but it is not this one.