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6 Cards in this Set
- Front
- Back
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Leasehold Valuation
(Part 1) Analysis of Market Evidence 1 Rent Paid 2 Market Rent 3 Profit Rent 4 PV £ 1 pa for x years @ x % i.e. 3.9412 5 By Trial and Error |
Annotation
1- Rent Paid by leaseholder to Landlord 2- Rental Value of the property in the current market 3- Sum of money calculated between the rent paid and the market rent 4- Multiplier from dividing price by profit rent 5- Calculated using different % in the present value of £1 pa formula until the figure obtained using a particular % as part of the formulae is the same or closest to the present value calculation result |
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(Part 2) Valuation
1 Rent Paid 2 Market Rent 3 Profit Rent 4 PV £1 pa @ x years @ x % 5 Valuation |
1- Rent Paid by leaseholder to landlord
2- Rental Value of the property in the current market 3- Sum of money calculated between the rent paid and the market rent 4- PV calculated using the PV of £1 pa formula to manipulate the 5 year income stream to present value, using the percentage figure obtained through the trial and error process 5- Calculated by multiplying the Profit Rent to the PV figure. |
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Rent- free period and Capital Value
(Part 1) 1 Rent Passing 2 TRR 3 ARY 4 Rent Free Period 5 Years to Next Review |
Annotation
1- Contract rent for the property- current rent been paid 2 -Potential buyers expecting rate of return on the purchase of the property 3- (Initial Yield) Percentage figure used to determine what the property is able to achieve when sold at market value- Used to present risks associates when purchasing a property 4 -Period of time which is usually offered by landlords to encourage potential tenants to sign a new lease 5 -Time between when property was let and time to rent review i.e. property let to company 6 months ago and 5 yearly upward only rent reviews- 4.5 yrs |
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(Part 2) Term
1 Rent Passing 2 YP x years @ x % 3 PV x years @ x % 4 £ x |
Annotation
1- Contract Rent- actual rent been paid for property 2 -Calculated using the PV £ pa formula, used to manipulate the years to review income stream to the present value, incorporating the TRR-.Years to next review figure. 3- Calculated using the PV £1 formula to manipulate the time property let to a company lump sum to the present value, using the TRR. 4 -Calculated by multiplying the rent passing with the YP and PV figures |
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(Part 3 ) Implied Rental Growth
SF = P = G = |
SF - Sinking fund is calculated using the required rate of return and years to review. Its function is to calculate the sum that is due to be invested; to accumulate to £1 in a particular number of years
P - Rental growth in number of years implied by the ARY and RRR G - Growth is calculated using the rent review pattern figure |
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(Part 4) Reversion
1 Current Market Rent 2 A of £1 x years @ x % 3 Projected Rent 4 YP in Perp @ x % 5 PV x years @ x % 6 £ x 7 Valuation £ x |
Annotation
1- Rent received by the property in the market today 2- Calculated using Amount of £1 formula, which finds the future value of a single sum presently 3- Current Market Rent x A of £1 figure (above) 4 -Found using YP in Perp formula which uses Initial Y 5 -PV calculated using PV £1 formula to manipulate the years to next review lump sum to the present value, using the TRR figure 6 -Calculated- multiplying the projected rent with the YP and PV figures 7 -Valuation found by adding the final term figure to the final reversion sum. |
