How To Value A Lease

[Damaz6052]

How can I work out a value for my lease the buildings been completly renovated although the new owner will make changes.

Thanks

[SunbeltAsiaExpert]

There are no rules to govern the determination of the lease value and/or rent rate. The rent rate is determined by the mutual agreement of the landlord (lessor) and the Tenant (Lessee). It should be taken into the consideration that when leasing a property for a period of more than 3 years, it should be registered at the local land office. Even though it is based upon the mutual agreement of the Lessor and the Lessee, the rent rate to be declared at the land office must also be reasonable and justifiable as the Land Office will impose a registration fee of 1% of the total lease value.

The information that could be obtained from the Land Office would be the appraisal value (the sale and purchase price).

1. The Land office will use their central database to determine the minimum value of the land

2. The criteria that would be taken into consideration in determining the value of the building structure are the type of building e.g.:

· Commercial building,

· Single House

· Town house

· Others

3. The materials used for the construction would also participate in the building value determination. Such examples are:

· One storey building made of wood; or

· One storey building made of brick; or

· Two storey building, all made wood; or

· Two storey building, all made brick; or

· Two storey building, one floor is made of brick and the other made wood;

The value obtained from the land office is considered to be the average value and/or the minimum amount.

Another form of property appraisal can be accomplished through a private property appraiser. Apart from the information and criteria mentioned above, they would also be considering the environmental factors both on broad view as well as the local area.

The information provided would be the appraisal value, the market value as well as the neighboring property rental rate including the status and condition of the designated property.

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