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About 20 years ago it was recognised that an anomaly could arise in the application of the dual rate method of valuation where the income varied during the term, and in subsequent years various methods of modifying the dual rate calculation were proposed, including the Double Sinking Fund Method (A. W. Davidson), and the Annual Equivalent and Sinking Fund Methods (M. J. Greaves). A further alternative, Pannell's method, has also been suggested, but it is not considered here. These three methods give somewhat differing results as demonstrated by Baum and Mackmin,1 since the underlying assumptions are different. These latter authors came to the conclusion that the Double Sinking Fund Method (DSF) in particular could result in a degree of over‐valuation and the purpose of this paper is to examine the reasons for this.

In the previous paper the reasons for the well known anomaly in the valuation of varying incomes of limited duration were examined and it was shown that the Double Sinking Fund Method as originally proposed did not solve the problem where different remunerative rates of interest were used. It was pointed out that in fact the problem was not a dual rate problem but a triple rate one since during some part of the life of the income there were three different rates of interest operating. If, however, the problem is constrained by requiring that during any part of the period only one remunerative rate is permitted, then the Double Sinking Fund Method is consistent, providing that it is appreciated that during one period there will be a shortfall of income which is exactly balanced by a surplus in another when each is capitalised at the corresponding remunerative rates.

A preceding paper by Baum examined the valuation of reversionary freehold interests, distinguishing between conventional and modern approaches. This paper applies the same approach to the valuation of leaseholds, and falls into two parts. Part 1 examines conventional leasehold valuations and the criticisms that may be made, concluding that both dual rate and single rate conventional valuations should be abandoned except in limited circumstances. Part 2 identifies three alternative modern approaches — real value, rational model and DCF — and compares their use in three general variations of leasehold valuation. The results are compared, and recommendations for their use are made. Finally an overview of the application of modern approaches to investment property valuation is presented.

The aim of the present paper is to consider the effect of the current approach to valuations for mortgage on the level of house prices during the housing bubble of 2000-2008 which has been a major contributor to the following recession followed previous smaller bubbles in 1972 and 1990. Despite a warning from the International Monetary Fund in 2004 that prices were too high and home buyers should “exercise particular caution”, no fundamental research appears to have been done into the contribution to this of those responsible for valuation for mortgage.

Data from the Nationwide Quarterly Index were used as a basis and compared with the writer’s professional experience in carrying out valuations for mortgage.

Instructions to valuers advising on the properties offered as security for a mortgage loan have requested only a valuation based on the market as it existed at the time of the valuation without regard to the possibility that a change in economic circumstances could cause a fall in the value of the security. Many mortgagors have found on sale or repossession that their liability to repay their mortgage is greater than the value of the property.

Valuations for mortgage should include an indication of the possible risks involved, including the results of changes in the global economic environment.

There has been much discussion in the popular media recently on the topic of Expert Systems (for example the BBC ‘Horizon’ of 21st March, 1983, or the Sunday Times, 1st May, 1983). Expert Systems are ‘computer programs that can acquire knowledge from experts and make it available in the form of advice to those less skilled’ (Landsdown, 1980). Such expert systems are one of the main building blocks of the ‘fifth generation’ computers, which are under development, with massive government encouragement, in Japan.

With the present issue the British Food Journal enters upon the fortieth year of its existence. The policy of the Journal has always been to expose and to assist in the suppression of adulteration and sophistication, to support the interests of Public Analysts, Medical Officers of Health, and Inspectors in the carrying out of their official duties, to be of service to all who are interested in or in any way associated with the administration of the various Acts relating to food, and to protect honest manufacturers and producers against competition from inferior or adulterated products.