Your client holds the long leasehold interest in the Surveyor and Clipboard, a restaurant which is on the fringe of a large town and which has been modernised and extended over the years.
The long leasehold interest has 17 years unexpired and your client pays the owner 10% of the rent received from the tenant. The tenant, who operates the business, holds a lease for the residue of your client's lease, but subject to five-yearly rent reviews.
Three years ago average annual turnover was
£196,000, but the current turnover is now
£240,000. Costs of sale and expenditure have increased by 10% over the period.
Showing your calculations and using no more than 10 main items of expenditure, calculate:
a. the value of your client's interest in the property
b. the value of the business as a going concern. State any assumptions made.