ABSTRACT
A capital value may be placed on a profit rent and this is the purchase price of the investment, commonly termed a premium, perhaps to reduce the level of rent. The traditional method of valuing a leasehold interest is to multiply the profit rent by the years' purchase dual rate tax adjusted. Valuers now use single rate methods, with yields adjusted to account for the higher risk in the case of simple investments, or cash flow where more complex valuations with varying profit rents are undertaken. A profit rent can occur if a leaseholder is paying a rent that is less than the full rental value of the premises, or if the property has been sublet the rent received from the subtenant is higher than the rent paid to the head landlord. It would also arise where the tenant paid a premium or carried out repairs upon entering into a lease in consideration of a reduction in the rent.
