The owner of the heritable interest of an office building, MrDawson, leases the building to a local business run by Mrs Grant,on a 15 year FRI lease with no rent reviews. The lease has 9 yearsremaining and the passing rent is £100,000 per annum. The propertyconsists of an open plan office with a total net lettable floorarea of 800 square meters. Mrs Grant is keen to purchase theproperty and have asked your advice on the marriage value and themaximum amount she should offer Mr Dawson. You have done someresearch, and have the following information:

- Comparable evidence suggests that a market rent of £150 persquare meter should apply to the subject property.

- All Risks Yield for similar rack rented heritable interest is5%.

- It is appropriate to use an annual sinking fund at 3%.

- The equivalent yield for heritable interest of similarreversionary properties is estimated to be 8.5%.

You should explain the choice of yields applied in yourassessment of marriage value.

Answer rating: 100% (QA)

The marriage value of the property is the difference between the market rent and the passing rent mu... View the full answer