The Local Authorities (Capital Finance) Regulations 1997

Capital value of a lease

80.—(1) In this Part, a reference to the capital value of a lease is a reference to the amount which, at the time a local authority dispose of the lease, the authority estimate will be the aggregate of—

(a) the value of the consideration which has been or falls to be received by them for the disposal before or during the financial year in which they make the disposal; and

(b) the value of the consideration which falls to be received by them for the disposal in any subsequent financial year.

(2) For each subsequent financial year referred to in paragraph (1)(b), the value of the consideration falling to be received in that year shall be determined by the formula—

where—

• “x” is the value of the consideration which the authority estimate will be received by them in respect of the disposal in that financial year;

• “r” is the percentage rate of discount prescribed for the financial year in which the authority make the disposal by regulations made by the Secretary of State for the purposes of section 49 (initial and subsequent cost of credit arrangements); and

• “n” is the financial year concerned expressed as a year subsequent to the financial year in which the authority made the disposal (so that the first of the subsequent financial years is 1, the next financial year is 2, and so on).

(3) For the purposes of this regulation and the following provisions of this Part, in any case where the consideration in respect of a lease consists, in whole or in part of—

(a) an undertaking to do or refrain from doing something at a future time (whether specified or not), or

(b) a right to do or refrain from doing something at a future time,

that consideration shall be regarded as neither given nor received until the undertaking is performed or, as the case may be, the right is exercised.