There have always been situations where tenants, for one reason or another, have paid rents in excess of open market rental value. The position today, due to the downturn in the letting market, is that many more tenants are now in this position. This poses a problem for valuation surveyors when asked to express an opinion on value for sale, negative or reverse premiums, and on value for asset valuation purposes where negative values must be specified. A further point for consideration is the issue raised by the Accounting Standards Board of charging future rent obligations as a single lump sum to profit and loss accounts. Explores these challenges in relation to leasehold valuation methodology and suggests approaches.
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