ABSTRACT
Estimation of full rental value implies estimating the rent at which a property would let on a given set of lease terms. One of these terms will be the frequency of any rent reviews. The standard period between rent reviews in the granting of new leases on commercial properties has, since the early 1970s, been about five years, and this still applies to most medium to large prime investments. The mass of market rental evidence in the case of most medium to large commercial property investments, however, relates to leases with five-year rent reviews. With regard to the treatment of future outgoings and liabilities in valuation, the traditional approach is to incorporate them into the valuation at their current cost and discount them at either the remunerative rate or at a sinking fund accumulative rate. Annual outgoings are implicitly discounted at the remunerative rate by being deducted from income, the net income then being capitalised at this rate.
