13. Assessing The Property Flashcards
(50 cards)
What is vacant possession?
Property wont be occupied when sold
What is an assured shorthold tenancy?
Fixed tenancy for short period (usually 12 months) where landlord can gain possession at end of agreement
What is a sitting tenant?
One who remains in the property when it is sold as they don’t have an AST
Why are lenders reluctant to lend to BTL properties with sitting tenants? (2)
- downvalues the property
- makes it hard to remove them as they can gain an OVERRIDING INTEREST in the property
What are the two things that relate to the legal title that could make a property worth less?
- defects
- disputes
What might property disputes include? Who’s responsibility is it to disclose them? What happens if they fail to disclose?
includes things like boundaries, trees, access and noise in relation to neighbours
it is the vendor’s responsibility to disclose and they can face legal action if they do not
What are things that can downvalue freehold tenure properties? (3)
Freehold are usually free from restrictions but value can be affected by:
- Easements
- Covenants
- Flying freehold
What things can affect the value of a leasehold property? (3)
- Restrictions/obligations
- Time remaining on lease term
- Former local authority flats
What type of construction might be less valuable with a block of flats?
Concrete high rise
What problems have there been in recent years in regard to new build leasehold properties? (3)
- must pay ground rent to developers
- must seek permission to make changes
- ground rent doubling every 10 years
What is a solution to someone with a new build leasehold if they are struggling to sell it due to unattractiveness of lease conditions?
buy the freehold if they can, though some have already sold it on to spectators
What is the leasehold reform bill? what will it cover?
A bill, not yet passed as an act of law
if passed, would make leasehold new builds illegal and would backdate to Dec 2017
What do graphs of relativity display?
How the value of a leasehold property diminishes as the term on the lease gets shorter
What is the minimum term lenders usually require to be left on the lease?
30-40 years after the term ends
How long must a new owner hold a leasehold property for before they have the legal right to extend the lease?
2 years
What is a statutory notice of claim?
When the vendor applies to the landlord to transfer their rights to extend to the new owner
Leasehold vendors should really consider extending the lease before selling if their property has less than how many years on the lease?
Less than 80 years
What is Marriage Value?
The difference between a property’s current value if it has less than 80 years on the lease and the value of if it was extended by 90 years
When extending a lease, what percentage of the marriage value does the freeholder have the right to?
50% - leaseholder must pay them this, plus fees
designed to encourage them to want to extend the lease
How do you calculate the cost of extending the lease to a freeholder?
Marriage value +
Diminution value (loss of ground rent, the fact they wont get the property back for another 90 years)
What considerations should be taken into account with the value and saleability of bungalows?
They are attractive but niche. In areas with too many, prices will be driven down
What considerations should be taken into account with the value and saleability of period properties?
Desirable if they are in good condition. Areas with lots of period properties are very rare and drive prices up higher
What considerations need to be given to the value of properties that have flat rooves?
Less value, the felt might need replacing regularly
What types of construction are easier to get a mortgage?
traditional types, bricks, mortar and tiled roof
