Lease subject to any other rent review
38(1)This paragraph applies to a lease if—
(a)the rent under the lease is subject to a rent review, and
(b)paragraph 36 does not apply to the lease.
(2)The term value is determined using this formula—
where—
c is the applicable capitalisation rate;
r1 is the rent at the valuation date (but see sub-paragraph (6));
r2 is the rent after the first rent review following the valuation date (but see sub-paragraph (6));
n1 is the length (in years) of the period during which the rent at the valuation date will be payable;
n2 is the length (in years) of the period that begins with the first day of the first rent review following the valuation date and ends with the term date of the current lease.
(3)If the rent review provides for the rent under the lease to change by the same proportion as an index of price inflation or the capital or rental value of property, r2 is determined using this formula—
where—
a1 is the index of price inflation, or the capital or rental value, at the valuation date;
a2 is the index of price inflation, or the capital or rental value, at the time when the previous rent review took effect or (if none has taken effect) when the term of the lease began;
r1 is the rent at the valuation date;
(4)If the rent review provides for the rent under the lease to be a percentage or other proportion of the capital value of property, r2 is determined using this formula—
where—
p is the percentage or other proportion;
v is the capital value of the property at the valuation date.
(5)If neither sub-paragraph (3) nor (4) applies to the rent review, r2 is to be determined in line with the terms of the rent review provision.
(6)If paragraph 26(3) requires the notional annual rent to be used—
(a)instead of the rent at the valuation date to determine the term value of the lease, r1 is the notional annual rent;
(b)instead of the rent after the first rent review following the valuation date, r2 is the notional annual rent.