Many people in the UK own a freehold. A freehold is where you have purchased your home from a previous owner and now own it outright, without having to pay ground rent or service charges. Instead of paying these costs, if you own a freehold you will be responsible for taking care of any repairs that may arise yourself, as well as making sure that the land the building sits on is kept in good condition.
Freeholds are an increasingly popular option for homeowners for a range of reasons, especially among older or retired people who may be looking to downsize or move into rental accommodation. As such, it is important to know how much your own freehold would be worth should you wish to sell it at some point in the future, as well as how to calculate the value of a freehold you might be interested in buying. It might also be important for you to be able to do this quickly, depending on your circumstances.
That’s where we come in. This handy guide offers you a how-to guide on valuing a freehold quickly and efficiently. Keep reading to find out more!
How to Quickly Work Out Your Freehold Value
Though we recommend having your freehold valued by professionals for a reliable and accurate valuation, there is a simple way to quickly work out an approximate value for your freehold. To calculate your approximate freehold value, you will need 3 key pieces of information. These include:
- The current value of your property. You can use other property values in your location alongside other factors such as size and space to estimate this, or get a formal property valuation.
- The annual ground rent of your property.
- The number of years currently left on the lease.
Once you have this information, you can use an online freehold value calculator to calculate your approximate value, or the calculation is as follows: the ground rent figure is multiplied by the ‘years purchase’, which is a multiplier calculated by the valuer based on an assumption of yield rate and corresponding value from valuation tables.
What Factors Affect Your Freehold Value?
As explained above, the current value of your property has a significant impact on the value of your freehold. There are several factors that will determine the value of your property. Being aware of these factors and doing what you can to influence them is key to increasing your property (and therefore freehold) value.
Firstly, as with any type of property, the location of your freehold is going to have a significant effect on its value. For freeholds located in busy areas or those that are highly desirable, it will be easier for you to sell your home as there will be more people interested and willing to pay a higher price. In contrast, freeholds located on busy roads with lots of traffic, or in areas that are socially deprived will be harder to sell. Easy access to shops, supermarkets and entertainment venues will likely attract more buyers and raise your valuation.
Other important factors include the size of the property and the number of bedrooms in the flat. The larger your home is, and the more bedrooms it has, the more desirable it will be to potential buyers. The increased square footage can also lead to an increased rental value in certain scenarios.
How to Access a Freehold Valuation
For more accurate estimates, you could speak with local estate agents who can use data they have collected on previous sales to calculate an approximate value for your property and freehold. For a truly accurate valuation, you should consider a formal freehold valuation – especially before making any legal or financial decisions.
The main benefit of a formal freehold valuation is that it gives you an accurate and unbiased view of the current market value in relation to the property. A professional will visit the site and carry out a series of checks, from which they will calculate its value. The final figure can be relied upon when discussing things such as inheritance tax, insurance and any other such tax implications. A formal valuation also makes it possible to discuss the sale of a property with a third party, due to the fact that the figure given has been created by an unbiased source and can be relied upon.
A freehold valuation is carried out for many different reasons, including the following:
- To inform you of the current market value in relation to your property,
- To find out if there are any hidden issues or maintenance problems that may pose a risk for when trying to sell it on later,
- To inform you of your options in terms of how you might be able to save money with regards to general upkeep costs etc.
<h2> What Next?
Once you have the value of a freehold, the fun really starts. However, whether you’re selling your freehold or looking to buy one, a well-calculated valuation is a vital place to start. Hopefully this article has given you all the tools you will need to quickly find an accurate value of a freehold.