Detailed preparation is key

I was asked recently by an old Chartered Surveyor friend to advise as to the range of premium on a 40 yr approx. unexpired lease he was considering buying. This friend insisted though that if I wanted to take on his instruction that I treat him as a client not as a friend.

I explained that to do the job properly after having inspected the property and read the lease, a lot of painstaking research as to relevant comparable sales and inputting each sale into a common spreadsheet is needed. Once identified, you then have to adjust each for time to the relevant valuation date, adjusting for lease length where appropriate before adjusting as to finer points such as outlook, condition, outside space. Having done this, the next step would be to weight the results in at least two different ways – the first giving a higher weight to the most recent of comparables as opposed to later ones and the second giving a higher weighting to those that felt more akin to the subject (in area and layout terms) before taking a median of both weighted results to conclude as to the final weighted target extended lease £rate psf payable.

All of this work being carried out before building the range of valuation computations looking at where the landlord may start, where he would start and then finally the finer range of target settlement ‘best’ to ‘worst’ valuations before writing all of this up into a concise and informative e-report with all annexures referred to attached.

This didn’t faze my friend as to the cost to do this work. In fact he fully supported it as he realised that by doing the job thoroughly you minimise being caught out later down the line, have a hopeful answer for anything the other side may throw at you.

He was delighted too with the report because as it turned out – in addition to all of the above, I proved to him that the expected settlement premium payable was between £100,000 to £70,000 less than the premium the (highly respectable) firm of selling agents had indicated he would pay.

He emailed to say “you go to a lot of work and effort in preparing your report and may I just say it is a mighty fine piece of work. I do thank you.”