The Valuation of Freehold and Leasehold Interests

Abstract

It has been shown in Chapters 3 and 5 that one method of obtaining the capital value of an interest in property is the Investment Method, namely

Capital value = Net income per annum × Years’ Purchase

Net income may be derived from the rent received per annum less outgoings. Years’ Purchase will differ according to the yield an investor expects from the property investment; it is suggested that the reader uses the pattern of yields included in Chapter 3 as a guide when carrying out valuation exercises.