In brief

Rents determined after the relevant market review date may be taken into account by valuers in determining a rent at a market review date. However, should a valuer’s rent be challenged, a Court must not have regard to rents that have been determined after the relevant market review date.

What you need to know

  • You should exercise caution in considering rents determined after the market review date. If the rent you are considering is very close to the market review date, then there should be no issue in taking into account that rent, particularly where there is insufficient rental evidence.
  • However, if the rent you are considering is well after the market review date (say 12 months or more) extreme caution should be exercised in using that rent. In such circumstances, you should clearly specify why that later rent is being utilised, such as there being insufficient rental evidence.

Background

In 2012, the Federal Court of Australia considered the matter in Propel National Valuers (W.A.) Pty Ltd v Australian Executor Trustees Limited. In that case, the court was considering a valuation of the market value of a property, in circumstances, where the valuer was accused of being negligent and engaging in misleading and deceptive conduct. For the purposes of such a proceeding, the Court determined that it was inappropriate to have regard to sales after the date of the valuation. However, in undertaking a valuation, the Court recited the 1943 case know as in Daandine Pastoral Company, which effectively states that in undertaking a valuation, subsequent sales can be taken into account if they are comparable and as long as no supervening events have occurred which would make the sale is not comparable.

Conclusion

The principles above equally apply to the determination of a rent. So, a valuer can take into account rents determined after the relevant market review date but do so with extreme caution. Naturally, the closer the rent to be taken into account is to the market review date, the safer the position will be. If there is insufficient evidence, there is a strong justification for taking into account rents determined after the market review date but please ensure this is stated very clearly in the valuation.

About the Author

Rohan Ingleton

Partner
A telecommunications and retail leasing expert, Rohan is a property specialist with an enviable reputation.

Related News

Valuer and Retail Leases Update – Can a market rent valuation take into account future events?

In brief In undertaking a market rent valuation, a valuer is permitted to take into account events (such as a major tunnel project), which the market understands may impact the rent being paid for leased premises. What you need to...
2 March, 2017

Valuer and Retail Leases Update – Does a tenant need to provide turnover figures to a valuer?

In brief A tenant is not required to provide its turnover figures to a valuer, unless specifically stated in the lease agreement.  However, if a lease requires that a tenant provide such figures to a valuer, then the tenant should comply...
5 April, 2017