When is a rental determination needed?

A rental determination for industrial or commercial property is very seldom a straight-forward affair. And while many are sought during a dispute, this is not the only time they should be carried out.

A rental determination is generally required on specialised properties where a fair and market-related rental would be difficult to ascertain. For example, some shops and factories, showrooms, hotels – even telephone towers – are not easy to value. Perhaps both the landlord and the tenant are unsure of what a fair value is because of the unusual positioning or use.

The landlord will seek a fair price to ensure a decent return on investment, while a tenant would want to ensure that they are not paying over the odds for this property.

However, there is more to it than this.

A normal valuation would look at comparative properties or current market trends. However, this property may not have a reasonable comparison, and this is where your property valuator would need a thorough understanding of the current market, industry specific knowledge, and a bucket-load of common sense.

An expert may be called in to assess the current lease agreements in place when a landlord needs to review his rentals with a view to obtaining an increase which is above the CPI or above a fixed percentage. Perhaps the property has enjoyed a growth in a buoyant market and is now woefully underperforming in rental terms, when compared to similar properties nearby. The landlord may expect tenants to become distressed at a rental hike, even though the current market and location supports it.

However, a rental determination can also serve to protect a tenant. If an area has been negatively affected by industrial growth, crime, or other factors then they can avoid paying too much in rental in an unsupported market.

Whatever your needs are, you need to know that the expert that you call in to perform your rental evaluation is a seasoned professional. We’d love to assist you, and warmly invite you to call us on 0860 999 440 or visit www.property-valuation.co.za.