leasehold ValuationLeasehold interests’ valuation advice for in residential, commercial, industrial and retail property as well as lands and buildings with and without redevelopment potential.
The leasehold contract for commercial properties can be complex agreements and generally There is no ‘standard’ lease, although all leases stipulate certain information such as
- Rent review mechanism
- Payment structure
- length of the lease (the term)
- rent (‘ground rent’ – for more information see below)
- leaseholder’s obligations (for example for service charges and repairs)
- subletting restrictions
Leasehold Valuation (Is Not Easy) More Difficult Than Freeholds.
The Main Disadvantage Of Leasehold Property
Once a leasehold period expires, the ownership of the property goes back to the freeholder, and therefore, the original capital outlay is lost and the investment return is in the form of income only.
If you consider that a leasehold with zero years left is worthless, then the closer the lease gets to expiry, the more it loses value, by contrast, the more time left on the lease, the more valuable it is.
Lease terms, period, repair, insurance and other liabilities under the terms of the lease will all vary. This means that the range of yields and capital values revealed by analysis of comparable evidence will be very diverse.
Given that, leasehold is a complex matter that involves assessing a combination of factors and value-influencing details that are not readily available, Leasehold valuation (is not easy) more difficult than freeholds