Freehold – what’s it worth?

Freehold – what’s it worth?

15:33 PM, 15th September 2021, About 3 years ago 5

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Hi, There is a block of 12 residential flats in a small town in West Sussex. They had Ninety-Nine-year leases granted in 1979 with a ground rent of £15 pa, increased in 2009 to £30 pa with another increase in 2039 to £60 pa until the expiry of leases in 2078.

5 of the 12 flats have extended their leases and the other 7 have less than 60 years remaining.

Does anyone have an idea of how much the Freehold is worth or how I would calculate this, please?

Many thanks


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Ian Narbeth

16:49 PM, 15th September 2021, About 3 years ago

Roanch, the fact you are asking this means you should not try this yourself.

I strongly suggest you need to take advice from a surveyor who knows the area and understands enfranchisement. He/she can advise on the likely premiums obtainable for granting lease extensions and can provide guidance on what you might offer.

Glyn Jenkins

9:24 AM, 16th September 2021, About 3 years ago

Buy bit coin instead. Both dodgy at the moment.

Dennis Forrest

9:41 AM, 16th September 2021, About 3 years ago

DYOR on government websites like - you can phone them for advice.
You will find that the costs of buying freeholds is not much more that getting statutory 90 lease extension at peppercorn (zero ground rents). You say that 5 of the lease have already been extended - I am assuming that all these have 90 year extensions at zero ground rent. These will be very cheap to enfranchise (technical term for buying a freehold), apart from paying the legal and valuers fees and of course your own legal and valuers fees.
I would recommend engaging a specialist valuer because the second part of your query is far more complicated - the 7 flats with less than 60 years remaining on the lease. These could be quite expensive, depending on the property values because less than 80 years left on the lease attract 'marriage value'. In a nutshell this means that the freeholder is entitled to 50% of the increase in value of comparing a property with only 60 years left and a freehold property. This is tricky to negotiate - you obviously want to try and make this figure as low as possible whereas the freeholder may well try and inflate this figure. Sometimes tenants improvements to the property are taken out of the calculations. Contact an ALEP valuer unless you have a friend who has used one the can recommend. You don't just need any valuer - you need one that specialises in leases and enfranchisement.

Mike in Worthing

10:35 AM, 16th September 2021, About 3 years ago

As a guide, I suggest "The Survivor's guide to Buying a Freehold (Lawpack ISBN9781905261109) As previous posts have said, it's not straightforward. The latter book has relativity tables (to value lease extensions) and present value tables (to buy out ground rent which the freeholder is currently entitled to.)
At 60 years remaining, the cost of enfranchisement is about 15% of the 999-year value, so this will be substantial as you have 7 unextended leases.
Much more important though is the consensus amongst the other leaseholders. Getting agreement of the required 51% and raising the money can be a nightmare.
Even after enfranchisement bigger problems occur. Prioritization of repairs can be a source of fierce debate. Some lessees think a pot-holed driveway is more important than leaking garage roofs (yes, really - I speak from experience!)
You need to consider the whole process. Have you a majority to start? Can you raise the money? Have you lessees willing to become directors? Are you confident that the block will be managed properly once the freehold is yours?
The most difficult part of the valuation is in its apportionment amongst the lessees. Those with extended leases have already paid once, they may be happy with the status quo.


11:44 AM, 16th September 2021, About 3 years ago

If it were me I'd get the Freehold valued and also a lease extention (assuming all 7 flats are the same).
I'd set up a freehold company to hold the freehold and divide the cost so that the 7 60 year leaseholders pay what their extenion was valued at and the legal costs of transfer into the freehold company is divided by all 12 leaseholders - providing of course you could all agree (the difficult part!)
Once you have the freehold company you can choose your own management company to run it if you wish.

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