Schedule 4 - Determining and sharing the market value Part 7: Determining the Term Value
Paragraph 35 provides that Part 7 is used to work out step 1 of the standard valuation method: determination of the term value.
	Paragraph 36 is used to determine the term value where the ground rent that the leaseholder must pay is not subject to a rent review. The prescribed capitalisation rate, ground rent that the leaseholder pays, and length of time (in years) until the lease expires must be entered into the formula at paragraph 36(3). Where the ground rent is more than the "notional rent", the notional rent not the actual rent must be used in the formula. Paragraph 26 sets out that the notional rent is 0.1% of the open market value of the freehold (for LRA 1967 claims) or of the share of the freehold (for LRHUDA 1993 claims) of the relevant premises.
	Paragraph 37 is used to determine the term value where the ground rent that the leaseholder must pay is subject to a rent review, and it is clear from the terms of the lease when and by what amount the ground rent will change. Paragraph 37(3) sets out the formula to be used to work out the term value in respect of the ground rent that is payable until the first rent review (after the date of the claim). Paragraph 37(5) sets out the formula to be used for all subsequent rent review periods. Where the ground rent is more than the "notional rent", the notional rent not the actual rent must be entered into the relevant formula.
	Paragraph 38 is used to determine the term value where the ground rent that the leaseholder must pay is subject to a rent review, and the lease does not otherwise fall under paragraph 37 (so the outcome of the rent review cannot be determined at the time of the claim). Paragraph 38(2) sets out the formula that must be used to determine the term value of these leases. The rent must be calculated on the basis that there will be one rent review, and the rent will thereafter remain unchanged. Paragraph 38 also sets out how to determine the amount by which the ground rent will change for two types of rent review provisions. Where neither is applicable to the lease being valued, the paragraph requires that amount to be determined in accordance with the terms of the lease. Where the ground rent is more than the "notional rent", the notional rent not the actual rent must be entered into the formula at paragraph 38(2).
	Paragraph 39 defines a number of terms used in Part 7 of Schedule 2.