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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.

Summary The ability of valuers to correctly assess available information and impound it into valuations is essential for the operation of an efficient property market. If valuers are doing a good job then they will take into consideration that information which is relevant to the type of valuation being undertaken. In this sense the market is efficient. No market is, however, completely efficient otherwise it would be impossible to earn abnormal returns. There is, therefore, sufficient incentive for investors to acquire costly information in order to improve performance. These issues are central to understanding the role of valuation models and clearly point to the need to improve both the collection and economic interpretation of information.

The value of land for development is normally estimated by the use of the comparative method or the residual approach. The aim of the paper is to examine appraisal practice, in particular the bases of valuation, availability and utilisation of data, reporting of the value figure and the management of risk.

The paper reports the findings of a survey of valuers from leading practices throughout the UK, bank lenders and developers. An example of an appraisal of an urban regeneration site is included in order to highlight the key issues within the discussion.

A variety of reporting practices is found from a tightly drawn range of values to single‐point estimates along with a detailed explanation of the assumptions employed. Developers and lenders favoured the latter, but they appeared to be open‐minded about a range of values or an expression of uncertainty being reported, provided that there is a clear and well supported justification. Risk management approaches are underdeveloped within the profession.

The valuation of urban regeneration land is said to be one of the most vexed issues in the appraisal of projects due to a lack of data transparency in urban regeneration markets, shortcomings in traditional appraisal methodologies and complexities of public sector grant procedures.

Considers the problems which have arisen in recent years from the many definitions of ′market value′ which occur in various parts of the world. Suggests there is a need for a common language and the avoidance of terms which tend to confuse the issues involved rather than clarify them. Deals with the concept of forced sale and makes reference to the vital role of the International Asset Valuation Standards Committee.

Describes the third edition of the Red Book. Notes that it is now mandatory for valuers undertaking certain types of asset valuation to state whether or not they have complied with the advice in the Red Book. Concludes that the third edition contains little new material but the changed format makes it more user‐friendly.

Reconsiders some of the market issues surrounding the over‐rented property valuation problem and extends the discussion to the valuation of self‐financing properties where the market yield exceeds that of long‐dated stocks. Emphasizes the problem of using long‐term implied growth rates in market conditions where short‐term conditions of no growth or indeed continuing decline may have significant impact on value. Concludes with the suggestion that those who support a DCF approach to valuation have still to convince the market of their case. There is also a need for further study in all areas associated with implicit valuation and explicit DCF valuations in particular in relation to the determination of all risk yields, determination of target rates, assessment of market rental value and the degree to which the market can accept valuations based on the judgement, intuition, or experience of a valuer in times of minimal comparable market evidence.

The valuation of interests in land for Inheritance Tax purposes may be relatively straightforward ‘open market’ valuations as at the date of death, or they may not. An actual disposal, either prior or subsequent to death, can produce prima facie useful evidence of value, but such evidence must be viewed in the context of the reliefs offered by ss. 131 to 139 and 191 to 198 of the Inheritance Tax Act 1984. The first in this series of papers examines the situation regarding lifetime transfers which may come into account due to the death of the donor occurring within seven years of making the gift, and develops a strategy for valuers wishing to maximise their use of the reliefs available.

Rising occupational costs, unit shop oversupply and falling retail sector profits have generated demands for changes to the current valuation and leasing procedures. Tests the accuracy of rental value estimation at review by identifying the actual residual value of occupation to existing tenants, and quantifies demand volume requirements at different levels of rental increase so that the interpretation of transactional evidence can be set in an actual demand volume context by selecting two shopping centres – Brent Cross and MetroCentre – for audit. Concludes that the long‐running dispute between landlords and tenants over rent review valuations is a market information problem that can be resolved only by the release of local sales data.

Aims to investigate the reliability of two of the criteria commonly used by banks in assessing the risks associated with lending on a commercial property project. The two criteria to be examined are loan to value and income to interest cover covenants. In the light of the research, suggests improvements and modifications on how these and other criteria are used to aid lenders in their decision‐making process. The time period chosen for this study is 1984 to 1994, a decade which saw the banks enter and then retreat from the property lending market on a scale hitherto unknown in the UK, with a number of these institutions incurring unprecedented losses. Compiled initially from an analysis of published property statistics on yields, capital values and interest rates, theoretical conclusions were then made on the reliability of the two criteria under discussion. Having identified the years 1984, 1987 and 1989 as being key turning‐points in the property cycle, these conclusions were “tested” by empirical research. Between May and July 1994 13 interviews were carried out with banks that had been active in commercial property lending for all or part of the relevant period. The interviews were based on a questionnaire which established the banks′ attitude to lending at each of the specified dates. Thus it was possible to identify how the banks′ attitude changed and how reliable the covenants proved to be in practice. First, demonstrates the fluctuations in interest rates, yields and capital values between 1984 and 1994, which resulted in the reliability of loan to value and income to interest cover covenants being examined. Second, presents the findings of the interviews with the banks for each of the years 1984, 1987 and 1989. Third, reaches conclusions and makes recommendations as to the use of the two covenants under discussion as well as considering additional criteria that are important to commercial property lending.

In recent years there has been a growing debate on price, value and worth, particularly in the UK, but increasingly taking on a European perspective as a result of the Single European Act and subsequent Maastricht Treaty. European integration facilitates cross‐border investment and the globalization of business activities. Consequently, there is increasing pressure on valuers to work towards the development of common investment valuation standards within Europe. Furthermore, there is a need to appraise the investment worth of properties, as well as understand local pricing methods, together with greater transparency of investment valuation methodologies and practices. This paper discusses the theoretical arguments surrounding the valuation standards prevalent in the UK and looks towards the potential for uniformly accepted valuation standards across European Union countries.