Posted on Friday, September 2nd, 2022 in by Matt Garmony
There is often confusion in the real estate industry between Rental Valuations and Rental Determinations. Both Rental Valuations and Rental Determinations have a licensed valuer assess or determine the market rent of a property at the market rent review date. However, in most cases, a Rental Valuation is prepared for one party, either the landlord/lessor or the tenant/lessee.
A Rental Valuation is prepared by a licensed valuer to assist their client with the market rent negotiations with the other party to the lease. A Rental Valuation is a detailed report including Property or Premise description, a schedule of comparable rental evidence and a summary of how and why the licensed valuer arrived at their opinion of market rent. For more details on what should be included in a Rental Valuation, click here.
A Rental Determination is a report where a licensed valuer is appointed by both the landlord/lessor and the tenant/lessee to determine or award the Market Rent. This joint appointment requires both parties to agree on the single expert valuer and to both sign an instruction letter agreeing to the appointment of the determining valuer. The determining valuer is generally appointed to act as an ‘umpire’ in a rental dispute when the landlord/lessor and tenant/lessee cannot agree on the market rent. In most Rental Determinations the determining valuer will ‘call for submissions’ from both parties as to their opinion of the market rent.
The parties may submit a rental valuation prepared by another licensed valuer or rental appraisal by a real estate agent providing rental evidence supporting their opinion of the market rent. The determining valuer will consider the submissions by the parties, however it is not obligated by them. The determining valuer will undertake their own research and investigations for comparable rental evidence to support or justify the market rent adopted.
In summary the difference between Rental Valuations and Rental Determinations is a Rental Valuation is instructed by one party for the use by one party only. A Rental Determination is a single expert report instructed by and prepared for both parties to a lease agreement where there is a dispute of the market rent at a market rent review date.
For more information on Rental Valuations and Rental Determinations please contact one of our helpful valuation staff.