Valuation of storage space taken?

by Readers Question

10:57 AM, 7th July 2016
About 2 years ago

Valuation of storage space taken?

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Valuation of storage space taken?

I own a lease self contained upper maisonette with its own garden since Aug 2000. It’s part of a two flat building. The lower maisonette was recently sold and the new owners have done building works and in the process have taken two storage areas which were adjacent to their property but part of my property.valuation

They have incorporated the space to their property such that they have gained about 1 sq meter from one area and ceiling height from the other as it was a staircase.

I am at a point in which I have sent them a letter before action and I’m about to engage a barrister. How do I go about valuing the space they have taken? I have lost about 3 sqm of storage space while they have gained a double bedroom.

They bought the flat for 425k and mine is worth about 650k. They are offering me a pittance which doesn’t even cover my legal costs to date and hey want to offer a shed in my own garden which would not make up for the space lost nor its actual value.

Solicitors so far tell me I have a very good case for trespass, but I would prefer to avoid going to court and reach a settlement. As their offers have been so low so far, I am looking for ways to value this properly so I can be clearer about my expectation.

Thanks for your help.

Gloria



Comments

Neil Patterson

10:59 AM, 7th July 2016
About 2 years ago

Hi Gloria,

Could you get a Surveyor to carry out a valuation on your property with two figures?
One pre changes and one post losing the area. You will then have a figure for the sum of your loss.

REB

12:12 PM, 7th July 2016
About 2 years ago

He can't make you sell your property to him. You can crystallise his mind as to compensation by stating that you do not wish to sell, you require him to reinstate your storage and you will require compensation for unlawful trespass for the period since he 'annexed' the property until such time as it is clear and reinstated to your satisfaction, plus your legal costs on an indemnity basis. I would also get your solicitor to serve him with a formal notice.

Nick Pope

10:09 AM, 9th July 2016
About 2 years ago

There are 2 elements to this, what you have lost and what he has gained through an illegal action.

Your loss is, to be frank, quite minimal and in valuation terms would amount to no more than a few hundred pounds. A surveyor would probably calculate it on the basis of a rental type value, capitalised up for the term remaining on the lease. However value to you is unimportant.

If, as you say the ground floor flat has gained a double bedroom than it has enhanced the value. Easiest calculation for this is to work out the floor area of the whole flat including your area and find out a rate per square metre at current values you then have a figure for your bit. For sake of argument if the flat is worth about £600,000 and is 60m2 then the value equates to £10,000 per m2. You may need to do some calculations regarding areas of sloping ceiling if they exceed the 1m2 you are talking about.

I would take no notice of how much the whinge as you can insist they re-instate as it was and that they pay all the costs. Don't let them try to kid you that as they have already done the work a judge would not require them to re-instate as it would be unreasonable - it's yours and you can be as bl**dy minded as you wish!

H B

18:29 PM, 9th July 2016
About 2 years ago

Reply to the comment left by "Nick Pope" at "09/07/2016 - 10:09":

You have absolutely nailed this. Although you may have undervalued 3m2 of storage space - how much would this be at a Big Yellow? Probably about £100 pm in London.

But the fact is, they have built on your land (I presume that the property deeds show this land as belonging to your property). You have them by the balls. They must have known that it was yours when they built on it.

Given that storage would cost you over £1000 per year, you also have a strong claim morally as well as legally.

I would ask for £30,000 or you will take it court and enforce the boundaries. I would probably settle for less and put the proceeds towards a loft conversion.

Nick Pope

18:56 PM, 9th July 2016
About 2 years ago

Sorry girls and boys, misread the area as 1m2 rather than 3m2 so the total should be around the £30,000 mark. I regret that us poor, uneducated people out in the sticks only get a few pigs bladders per m2 for storage so Lunnon prices are a fantasy!
Seriously though, you have the ground floor owner's cojones - Twist them!

Olu Adefisan

4:42 AM, 10th July 2016
About 2 years ago

Firstly, I will like you to consider the process, whether you wish to go to court or you would rather use Alternative Dispute Resolution (ADR) method (which is cheaper and more flexible).

Concerning the process, it is cheaper if this matter is dealt with using an alternative dispute resolution (ADR) method. Since this person is your neighbour, it also helps to preserve your relationship longer term other than if you go to court. If ADR is to be used, you should agree with your neighbour that you wish to use this method in resolving the matter. In doing so, you both could jointly appoint a valuation surveyor (it is cheaper) or write to the RICS President to be your mediator, the RICS president upon receiving your notice himself would not be the mediator but his office would nominate a chartered valuation surveyor with adequate experience and competencies to handle the matter for you. If you fail to agree on a joint appointment of a single valuer, either side can appoint their own valuer (more expensive) and the two valuers would then come to an agreement on the two of you behalves. If they both fail to agree, a third valuer to be nominated by the RICS president will give a binding ruling. All this could be set out for you by your lawyer in the terms of the ADR resolution of the dispute.

Depending on whether it is allowed in the process of the ADR terms that you agreed upfront with your neighbour, I will advise that you instruct a valuation surveyor to prepare a valuation report for you and if you can afford, the brief should include retaining the same valuer as your expert mediator or expert witness (in the event the matter proceeds to court provided you wish to leave the option of going to court in the future open), in addition you are retaining the instructions of your lawyer through whom you should filter through your correspondence to the other party.

Next, I will like to add some pointers to the advise provided to you by Nick Pope above by asking you to ensure whether the extension by your neighbour would have been impossible without the strip of 1m2 encroachment into your property and the additional headroom taken from your boundary? If the answer is yes, then you should look at possibility of valuing as a 'ransom strip' in which the rule of thumb is that you are entitled to 1/3rd of the value increase resulting from access gained by your neighbour from your property. If you look at what figure that this scenario throws up (lets call it Value 2), you can them make a comparison with the value provided by the approach described by Nick Pope above (lets call this Value 1). The third approach is useful if the property types before and after are clearly identified in the local market (i.e. if there has been clear evidence of transactions in the local property market of the price of a 2 bed flat (having 1 double room and 1 single room) as clearly different from the price of another property type that is a straight 2 double bedroom flat, then a third approach which involves looking directly at prices of comparable properties of each type could be used to determine the difference between these two to come to your value figure.

You stated the value at which they bought the property but you did not state the current value. Assuming it is a 2 bedroom flat and the current value is £650k and imagining that the additional value resulting from the extension is in the region of £100k, the before value would then be set at £550k.

All these figures could be set out for you by your valuation surveyor who would then conclude in his/her professional opinion/judgement as to what the additional value has been generated to your neighbours property resulting directly from the encroachment on your property. Usually the valuer would pick the highest value of the approaches considered. The surveyor would explain the approaches taken and provide justification for their approach. Normally, you would split the difference in the value on a 50/50 split. However, because your land was taken without your authority you have a stronger hand, the split could be 60/40 in your favour.

In the analysis in the para above, i.e. that the additional value generated is £100k, based on if it is a ransom strip, then striking a compromise on a range of £33k (i.e. 1/3rd of the increment in the value) is sufficient to give you adequate compensation for your loss. If Value 2 above is adopted, playing devil's advocate, your neighbour valuer may argue that the assumed additional value of £100k is generated as a result of costs of refurbishment incurred and may seek to reduce the money to be split by a proportion of the overall refurbishment costs attributable to the 1m2 and headroom space taken from you; lets assume the apportioned costs is £20k. The net additional value to split will then be £80k (i.e. £100k -£20k). You can then strike your bargain at say 60% of £80k i.e £48k.

The figures I used are mere assumptions that are used to illustrate the process to you and to demonstrate the principles and approaches that you need to take. You should involve the advise of a valuation surveyor to pinpoint the exact figure for you.

gcat uk

5:27 AM, 10th July 2016
About 2 years ago

Hi, thanks for your reply. I have lost 4 cubic meters of usable storage space. Thanks for all the ideas on how to value the space.

My own calculation was that it must be worth at least 20k. But I need to find an expert that can confirm this. Any recommendations on how to do this? I am struggling to find someone that could help.

Does anyone here know what the consequences of simply taking the space back myself could be? From what I have seen so far, it seems they could only claim for any damages to their property, so provided these are minimized, it seems to me this could be the quickest/cheapest route.

Mark Alexander

7:37 AM, 10th July 2016
About 2 years ago

Reply to the comment left by "gcat uk" at "10/07/2016 - 05:27":

Look up the member profile for Mark Smith (Barrister-At-Law).

His chambers offers a free 15 minute telephone consultation to property118 members and they have a barrister specialising in Counsel on such matters within their chambers.

They are the Chambers that represented Property118 Action Group in our win at the Court of Appeal against West Bromwich Mortgage Company.
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