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
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.
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.
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.
The writer kindly acknowledges Steve Simpson of Simpson Forsyth
for alerting the writer to the decision in Daandine.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.Madgwicks is a member
of Meritas, one of the world's largest law firm
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The "informal tenant" was able to successfully secure a Lease by depending on the Doctrine of Equitable Estoppel.
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