Avery Associates senior property surveyor Kieth Fraser talks about the difficulties of probate valuation of property, in this case flats with short leases…….
Our duty to undertake valuations vary in terms of purpose, albeit for secured lending, capital gains tax, probate, matrimonial, amongst others. The method of valuation applied for residential valuation is normally the comparable method, except for some circumstances eg a residential building used as a house in multiple occupation, where an investment method may be used.
One area, which challenges the valuer of residential property, is flats with shorts leases.
Due to the limited access to secured lending and reduced marketability of these types of properties, these flats are harder to sell, and as such, more difficult to value.
We as a firm, are well versed in valuing the premiums to extend short lease flats by the statutory 90 years, however most valuers do not have this expertise. Thus, as lease extension practitioners and part of our valuation service, we would first value the premium to extend the lease, and then deduct the premium figure from the extended lease value of the property. We would then take a view as to what kind of further discount, in a hypothetical world, we would apply, in order to arrive at the short lease value of the property.
There may be other ways to arrive at the value, the easiest being to source short lease flat deals as part of the comparable evidence. However, our method, in our professional opinion, gives a more valid opinion as to the market value taking account of all the scenarios surrounding problematic property, that can be – flats with leases with a short unexpired term.
For advice on probate property valuation call Jeffrey Avery on 0800 567 7769
