Schedules

Schedule 4Determining and sharing the market value

Part 3Determining the market value

8Market rack rent leases

1

The standard valuation method is not compulsory for the property comprised in a current lease if it is a market rack rent lease at the valuation date.

2

If section 3(3) of the LRA 1967 applies to the current lease (successive leases treated as a single lease), sub-paragraph (1) is to apply only if the one of those leases which is in effect at the valuation date is a market rack rent lease.

3

A “market rack rent lease” is a lease which—

a

was granted—

i

for no premium, or

ii

for a premium which was low relative to the value of the freehold of the property with vacant possession at the time of the grant,

b

was granted at a market rack rent, and

c

the parties entered into with the intention that the rent would be a market rack rent.

4

In this paragraph “market rack rent” means a rent which was, or was reasonably close to, a market rack rent at the time of the grant.