ABSTRACT
This chapter considers that part of the process when the valuer, having completed all the prerequisites to act, confirmed terms of engagement, completed all necessary inspections and investigations, reached an opinion as to market rent and current market activity. It also considers that through those processes, assessed the market for the subject property and associated risks relating to tenant covenant, unexpired lease length and other factors, now needs to use the income approach to determine market value for the required purpose. The chapter explains the treatment of voids, that is periods of vacancy between one lease and next lease where premises have to be marketed to secure new tenants. It explores that all freehold income valuations are based on the principle of discounting future net benefits to their present value. The chapter discusses that discounted cash flow is generally used where it is desirable to express implied elements of future changes or lack of changes such as rental growth explicitly.
