The principle behind this valuation advice is that whilst the area you intend to convert into a loft extension or part of garden you intend to erect an extension in may be within the demise of a leasehold unit, a change of use would require landlord's consent as would any proposed alteration that would affect the structure of the building.

In deriving the value of the proposed extension it has to be considered what value developed the improvement/new construction will result in. This less the costs of such conversion, normal profit etc. is the inherent value of the land and would normally be shared on a 50:50 basis between the parties.

Therefore to start, a valuer has to assess the end value of the new space to be created, possibly less the value of any space lost, in the case of extending into a garden. This being the value added that soley relates to the new space, unless it is large enough to create an additional self contained unit.

Often it will be possible to take the values of the existing units within the same building, terrace, street or other comparable properties and then derive a value per square foot for each comparable. This can then be applied to extra space to be created. In valuation theory land values of undeveloped space range between 30% to 45% of the end value, so using this as a rule of thumb a space value could be created. The reason why there is a range is because construction costs and site difficulties vary so significantly that the actual build costs would determine the residual value for the shell.

A surveyor could cost the project using the Building Cost Information Service construction indices for the age/class/location of property.

A surveyor may refer to an architect's pricing guide such as Mitchells or SPONS to calculate the built cost. Such pricing guides also often give a pricing breakdown per element of the construction process, i.e., roof, floors... to make it possible for an adjustment to be made to the Building Cost Information Service construction indices data say to take 70% of their cost for the type of building for an internal conversion and fit out as opposed to 100% for a new build extension.

To this calculation the surveyor/valuer has to make an allowance for normal profit which will then create a residual value for the shell which would be apportioned between the parties with a share payable to the Freeholder by way of a premium or share in development proceeds.

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