Lease

[kangeroo]

Hello everone.

Just wondering how much would someone pay for a 30 year lease i was thinking 2 rai around korat but is there a guide of some sorts available.??

Cheers Kangeroo

[solo siam]

Probably about 20% less than freehold, if any difference at all.

[Totster]

Moved to the property section

totster

[quiksilva]

Probably about 20% less than freehold, if any difference at all.

Agreed.

[lannarebirth]

How much would one pay to assume the 30 year lease after ther first 10 years have passed?

[quiksilva]

Good question, and not an easy one to answer as it might first appear. Strictly speaking a leasehold value is not computed by a % of the Capital Value.

To be exact you must work out the sum of the Present Value of each future year's rent.

Take today's passing annual rental rate (using comparable information if you dont have it to hand), apply an assumed growth rate (using historical annual rental figures to establish a trend, comparable data, or the built-in rental escalations to annual rent if the lease is so structured). Then discount each year at a suitable rate depending on the risk profile for the property.

Using the Present Value Formula = 1 /(1+i)^n for each future year's rent.

Not too sure how helpful that is and forgive me if I don't go into exhaustive detail. Leasehold valuations are not my favourite subject.

They are complicated beasts and market practice by most landlords is horribly simplistic (sum / original years x how many years left) it really is not reflective of true market value and explaining time value of money to Thai landlords can be frustrating to say the least, so as always things end up being agreed via compromise and negotiation.

[kangeroo]

hello well that cleared it up.

regards kangeroo