But before the author gives himself a pat on the back, it has also come to my attention that we could offer an even clearer explanation. In 2020 where time is scarce, this blog will revisit the subject and break it down as simple as possible.
If you own a house or are the freeholder of your building, this blog does not apply to you. It does apply to you if you are a leaseholder who has a loft space above their flat and there is an opportunity to convert, often adding a further bedroom and en-suite bathroom.
In 9/10 cases, you will not own the loft space. You can check this by reading your lease but these are often so poorly worded that you should seek the advice of a surveyor or even a solicitor.
If are the 1 in 10 that do own, it is still not that simple. Leases can prohibit owners from undertaking alterations. Even if your lease states that you can, you will likely still need to cut into the external fabric of the building and that is owned by the freeholder.
If the freeholder can stop your conversion they can charge you a sum of money for their permission. This leads us to:
Whilst the calculation is not in any legislation the commonly accepted standard practice is:
This example has only 4 moving parts and small deviations can alter the final figure significantly. A report by a chartered surveyor would be considerably more detailed:
In the real world, it is the leaseholder who is taking all of the risks for the build, so it is also normal for a further deduction to be made to reflect this. The build cost only ever goes up. Never down!