There are no yardsticks to measure the value of a freehold property. This is because evaluating a freehold is not an accurate science. However, you can follow certain guidelines on what you need to take into consideration when valuing a freehold, which is produced by the advisory services that give free advice to leaseholders. You must also take these three factors into consideration:
1. The current value of the property
2. The annual ground rent
3. The number of years currently left on the lease
Also, evaluate the expected percentage increase in property value that results from extending the leases of different lengths, along with forecasted long term interest rates and inflation rates.
Take help from an expert valuer rather than trying to work out a figure all by yourself, to present before the freeholder. An expert valuer will be able to give you the best advice, which will enable you to make a practical offer.
You will find expert valuers online. They will help you with the entire process of negotiation and buying the freehold.
For the benefit of the freehold, most surveyors add a little extra to a property’s value. This is done after comparing it with similar property with the same number of years on the lease but no freehold.
First, approach your freeholder informally, before you serve him with a first notice. This document should include your preliminary offer for the freehold, which starts off the legal process of buying it.
A word of caution. Never produce an initial notice without obtaining an expert valuation. If you make the wrong evaluation in the initial notice you won’t be able to take back the offer. After the initial notice, wait for the freeholder to reply to it with a counter notice by a date that you have given. The freeholder must be sanctioned at least two months from the date the initial notice is served.
If the freeholder is not sending his counter notice within this period, the leaseholders can take matters into their hands. They can apply for a vesting order at a court. It is now up to the court to move the freehold to the leaseholders. So freeholder’s should respond on time to the initial notice for their own benefit.