Your client Kevin’s Train Spotting Limited holds a 25-year lease dated 01/01/2000 with 5 yearly reviews. The rent passing is currently £92,000 per annum. The Company’s Director has approached you with a view to re-gearing this lease, as at least 7 years are required to obtain a bank loan to expand the business. They are currently proposing a new lease of 25 years from 01/01/22 again with 5 yearly rent reviews. Having reviewed the market, you understand that Market Rent for the property is £105,000. The property is currently yielding 4.5%. The tenant pays tax at 40% and has a sinking fund at 2.5%.

Assess from both the landlord’s and tenant’s perspective and advise Kevin’s Train Spotting Limited on the new rent you feel is appropriate. Discuss the use of dual-rate valuation tables and the criticism that this method does not adequately allow for the replacement of capital invested. Provide outline examples to support your arguments.

Answer rating: 100% (QA)

From the details given regarding a lease agreement it is required to make an analysis of the lease agreement based on two different proposals and based on the perspective of the landlord The details o... View the full answer