The Comparison Method
Self-explanatory, always used where evidence is available. Compare similar properties, similar locations and attributes etc… to apply a comparative rate to the subject being valued.
The Latent Value/Residual Method
This method is used for property where there is development potential and given assumption circumstances, the value of the land or land and buildings can be ascertained or the profit where the value of the land or land and buildings is known.
The Profits Method
This produces a Market Rent to which the comparison and or investment method may be applied. It is used for business premises which have a turnover and is essentially an analysis of the accounts to ascertain a notional fair Market Rent. (Pubs, Grocery Stores etc)
The Contractor's Method / Depreciated Replacement Cost
This method is used for types of property which seldom change hands and for which there are few comparisons. Churches, Power Stations, Schools Hospitals etc.
The Investment Method
This method is used when there is an actual, notional or potential Market Rent. A market investment return yield is ascertained via the Comparison Method. This yield when divided into 100 provides a rent multiplier (Years Purchase) to produce the capital Market Value. Within this method there are;
Within this method there are;
- Conventional investment Method (explained above)
- Layer / Hardcore Method
- Discounted Cash Flow Method
- Net Present Value Method
- Internal Rate of Return Method