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LEASES (COMMERCIAL AND RETAIL) ACT 2001 - SCHEDULE 1

LEASES (COMMERCIAL AND RETAIL) ACT 2001 - SCHEDULE 1

Schedule 1     Working out market rent

   

(see s 54)

    1.1     "Market rent", of premises, is the amount that could reasonably be expected to be paid in rent for vacant possession of the premises on the open market if—

        (a)     the premises were let by a willing but not anxious lessor to a willing but not anxious tenant; and

        (b)     both parties acted knowledgeably and prudently; and

        (c)     the use to which the premises may be put under the lease is taken into consideration; and

        (d)     the amount is worked out in accordance with this schedule.

    1.2     The valuer must take into account the following in relation to the premises:

        (a)     the gross cost of occupancy;

        (b)     market evidence about comparable premises, including the level of incentives or inducements to lease (if any) being offered in the marketplace for comparable premises;

        (c)     the estimated gross occupancy costs that would be agreed, on valuation, between a willing lessor and a willing tenant in an arms length transaction, after proper marketing of the premises, if the parties acted knowledgeably, prudently and without compulsion;

        (d)     any covenant or restriction on the use of the premises or any covenant on adjacent premises that run with the premises;

        (e)     court precedents about valuation practice;

        (f)     the proposed arrangements for rent review;

        (g)     any building service or improvement offered by the lessor (other than a service or improvement that can be removed or withdrawn by an outgoing tenant or someone other than the people for whom market rent is being worked out);

        (h)     the condition of the premises, as provided by the lessor;

              (i)     particulars required to be disclosed in a disclosure statement that affect or potentially affect the rental value of premises, including particulars about a tenant's obligations, costs or responsibilities;

        (j)     the terms of the lease or proposed lease;

        (k)     any other relevant market evidence.

    1.3     The valuer must not take into account the following in relation to the premises:

        (a)     a special interest or concern of the lessor or tenant;

        (b)     the tenant's goodwill;

        (c)     the tenant's fixtures and fittings;

        (d)     an advantage or disadvantage arising from the current lease agreement.

    1.4     Section 1.2 and section 1.3 do not limit the matters that the valuer may take into account in relation to the premises.

    1.5     A party to the lease may, on the party's own initiative, make a submission to the valuer within 14 days after the appointment of the valuer and, if the party makes a submission within that time, the valuer must consider the submission.

    1.6     The valuer must, in writing, tell each party to the lease of the party's right to make a submission in relation to the valuation.

    1.7     A notice must require the parties to make their submissions within 14 days after the date of the notice and tell the parties that, if they do not make a submission in that time, a valuation may be made without their submission.

    1.8     The valuer may proceed with a valuation of a lease even if a party to the lease does not make the requested submission.

    1.9     The valuation must give detailed reasons for the valuation and must include particulars of the matters that the valuer took into consideration in working out the valuation.

    1.10     The valuation must include particulars of any concession or inducement disclosed to the valuer.

    1.11     For this schedule:

"gross cost of occupancy", for premises, means the rent for the premises, plus recoverable outgoings (other than promotional levies or advertising commitments required by the lease).