Inheritance Tax Valuation Success: Securing Freehold Ownership to Maximise Commercial Property Value
Case Study
The Situation
GJS Dillon were instructed to provide a valuation of a commercial premises in Blackpole, Worcester, for Inheritance Tax purposes following the death of the business owner.
We were approached by the deceased’s daughter, who was acting as Executor of the Estate. She had no prior involvement with the property and held no historic title documentation or property records. The assumption was that the property was held freehold, and the instruction was initially expected to be a straightforward vacant possession valuation of an industrial premises.
However, during our standard due diligence process — including obtaining Land Registry Title and Plan documents — we discovered that the property was not freehold, but instead held on the residue of a long lease with only 55 years remaining.
A lease term of this length can significantly affect marketability, mortgageability, and value, effectively creating a wasting asset.
Our Role
Our role was to provide an accurate valuation for Inheritance Tax purposes while ensuring the Executor fully understood the legal and financial position of the asset.
Upon identifying the leasehold issue, we advised the client on the implications of a diminishing lease term, including the potential reduction in value and the difficulty in selling or financing the property in the open market.
We then acted on the client’s behalf to explore options to protect and enhance the value of the Estate’s asset.
How We Helped
Conducted thorough title investigations as part of our valuation process.
Identified that the property was held on a long leasehold interest with only 55 years remaining.
Explained clearly and sensitively the implications of the short lease term to the Executor.
Advised that the remaining term would negatively impact value and saleability.
Entered into negotiations with the freeholder to acquire the freehold interest.
Successfully secured the freehold, transforming the property from a diminishing leasehold asset into a more valuable and marketable freehold interest.
Throughout the process, we provided reassurance and handled negotiations on behalf of the client during what was an emotionally challenging time.
Outcome
By acquiring the freehold, the Estate was able to significantly enhance the property’s market value and improve its saleability. What began as a routine Inheritance Tax valuation evolved into a strategic intervention that protected and increased the value of the Estate’s asset.
The client was able to proceed with greater confidence, knowing the property could now be disposed of at an improved value.
Client Feedback
“I had no idea that the property was not freehold and did not even know that commercial properties could be held on a long leasehold basis. Due to my father’s recent death, and the fact that I had to deal with his Estate, I felt completely out of my depth. However, GJS Dillon dealt with everything on my behalf which resulted in a positive outcome, and I cannot express my gratitude enough for their assistance in this difficult time for me.”
We’re here to help
Dealing with Inheritance Tax can be a complex process particularly at an emotionally challenging time. We will provide you with an accurate valuation in accordance with RICS standards, and will ensure you fully understand your legal and financial position of the asset, if you need a RICS Red Book Valuation for Inheritance Tax purposes, just fill in a few details via our contact form and we will be in touch.
