The Rent Review Specialist
CPIH and Rent Calculator
01/12/2020
CPI is a European measure, CPIH takes into account the cost of housing. CPIH has become the Government’s measure of choice. CPIH calculates its averages differently to RPI, so tends to be consistently lower.
With the news that the RPI is to be phased out by 2030, I have added a CPIH (Consumer Prices Index Housing) and Rent Calculator; please click here.
With the news that the RPI is to be phased out by 2030, I have added a CPIH (Consumer Prices Index Housing) and Rent Calculator; please click here.
Covid-19 and rent review
02/04/2020
At rent review and lease renewal, the impact of the respiratory disease COVID-19, commonly known as Coronavirus, highlights two critical factors in negotiation and rental valuation: (1) post-review evidence and (2) post-review event. The principles are reasonably straightforward to understand from case law, even if not always appreciated!
(1) Post-review evidence. The principle is that transactions after a review/valuation date are generally admissible in evidence. However, the weight to be given to such evidence is a matter of assessment. The longer the period between the valuation date and the post-review date comparable, the less weight the evidence may carry.
(2) Post-review event. A post-review event is inadmissible as evidence because what happened after the valuation date is not a foreseeable event on the valuation date. The parties are not entitled to take into account subsequent events which showed how possibilities turned out: to do so would introduce knowledge not available at the valuation date.
One can have regard to events that have occurred or circumstances which existed at any time up to the valuation date. Such are “known knowns” on the valuation date. ‘Known knowns” may include transactions on comparable properties and other general events affecting property values.
One can also regard “known unknowns” - such expectations of future events as might exist at the valuation date, provided that those would be matters that would be known in the hypothetical market at the valuation date. Expectations of future events often affect property values at a given date: for example, events at a national level, such as changes in interest rates, changes in property taxation, or anticipated local events.
However, actual future events must be disregarded, except to the extent they were foreseeable and foreseen at the valuation date. Landlord and tenant cannot know at the valuation date what might happen a few months after they agree on a rent. They can only be credited with the degree of optimism or pessimism in the market on the valuation date.
Coronavirus? On 31 December 2019, the disease, now known as Covid-19, the outbreak was reported as started in Wuhan, China. 31 January 2020: the first Coronavirus cases in the UK. Whether 31 January 2020 will generally be accepted as the effective date in the context of a post-review event, I shall reason accordingly.
(1) Post-review evidence. The principle is that transactions after a review/valuation date are generally admissible in evidence. However, the weight to be given to such evidence is a matter of assessment. The longer the period between the valuation date and the post-review date comparable, the less weight the evidence may carry.
(2) Post-review event. A post-review event is inadmissible as evidence because what happened after the valuation date is not a foreseeable event on the valuation date. The parties are not entitled to take into account subsequent events which showed how possibilities turned out: to do so would introduce knowledge not available at the valuation date.
One can have regard to events that have occurred or circumstances which existed at any time up to the valuation date. Such are “known knowns” on the valuation date. ‘Known knowns” may include transactions on comparable properties and other general events affecting property values.
One can also regard “known unknowns” - such expectations of future events as might exist at the valuation date, provided that those would be matters that would be known in the hypothetical market at the valuation date. Expectations of future events often affect property values at a given date: for example, events at a national level, such as changes in interest rates, changes in property taxation, or anticipated local events.
However, actual future events must be disregarded, except to the extent they were foreseeable and foreseen at the valuation date. Landlord and tenant cannot know at the valuation date what might happen a few months after they agree on a rent. They can only be credited with the degree of optimism or pessimism in the market on the valuation date.
Coronavirus? On 31 December 2019, the disease, now known as Covid-19, the outbreak was reported as started in Wuhan, China. 31 January 2020: the first Coronavirus cases in the UK. Whether 31 January 2020 will generally be accepted as the effective date in the context of a post-review event, I shall reason accordingly.