Critically discuss the methods by which rental values are assessed and also the five main methods of capital valuation. Illustrate your answer with worked examples and consider the suitability of each method for the types of property for which it is gener

Rental Valuations

1. Comparitive Method

 This method compares the unit to be valued with another similar unit.
 Adjustments to the rent are made in order to reflect differences.

Example

Factory A
50 feet wide by 70 feet deep in good trading area.
Recently let on FRI terms for £70,000 per annum.

Factory B
60 feet by 80 feet in slightly poorer rental area.
Tenant only carries out internal repairs.

In order to calculate rent of factory B:

Factory A

Rent on FRI terms £70,000
/ are (50 x 70) £3,500

£20p.s.f
Factory B

Area (60 x 80) 4,800 f.s

In poorer position than factory A
Say rent p.s.f £18
£86,400

Add for landlord repairs £1,000

Rental value for B ...