Schedule 4 - Determining and sharing the market value Part 4: Assumptions and Other Matters Affecting Determination of Market Value
Paragraph 16 provides that, with the exception of paragraph 22, Part 4 applies to the determination of the price regardless of whether the standard valuation method is being used. Paragraph 16(2) provides that certain matters (under paragraph 22) must only be taken into account when the standard valuation method is being used.
	Paragraph 17 sets out assumptions 1 and 2. Paragraph 17(1) explains that these assumptions must be made when determining the value of the relevant freehold or notional lease.
	Paragraph 17(2) sets out assumption 1, under which various leases are treated for valuation purposes as merged with the freehold (in freehold acquisition claims) or with the interest of the person granting the lease extension (in lease extension claims). The leases which fall within assumption 1 are those which, under the LRA 1967 or the LRHUDA 1993, are (a) acquired or surrendered in a freehold acquisition claim, or (b) surrendered or deemed surrendered and regranted in a lease extension claim. The effect of assumption 1 is that the presence of intermediate leases in a property will not generally have an effect on the price.
	Paragraph 17(3) sets out assumption 2, which has the effect of ensuring that marriage value and hope value do not form part of the price. Marriage value is the additional value that may arise when the landlord’s and leaseholder’s separate interests are joined into single ownership. Hope value is the additional value that may arise from the potential for marriage value to be realised in the future.
	Paragraph 17(4) provides that other assumptions can be made when determining the market value, so long as they are consistent with assumptions 1 and 2.
	Paragraph 18 sets out that assumption 3 applies when calculating the price in a freehold acquisition claim under the LRA 1967 and a lease extension claim under the LRA 1967 or LRHUDA 1993. This assumption has two parts:
First, it must be assumed that the leaseholder has complied with the repairing obligations in their lease. As a result, a leaseholder’s property which has fallen into disrepair (in breach of the repairing obligations in the lease) will not be devalued, and so the price will not be reduced by reason of their breach.
Secondly, it must be assumed that the leaseholder (or previous leaseholders) has not made any improvements to their property. As a result, the price will not be increased because the leaseholder has, at their own expense, made improvements to their property so that it is more valuable.
	Paragraph 18(3) provides that in the case of a freehold acquisition of a house under the LRA 1967, if Section 3(3) of that Act applies (successive leases treated as a single lease), assumption 3 applies only to the lease that is in effect at the valuation date.
	Paragraph 18(4) allows other assumptions to be made when determining the market value provided, they are consistent with assumption 3. Paragraph 18(5) defines the term "tenant’s repairing obligation", for the purposes of assumption 3.
	Paragraph 19 sets out that assumptions 4 and 5 are to be used when calculating the price for a collective enfranchisement claim. Paragraph 19(2) sets out that assumption 4 has two parts:
First, it must be assumed that the leaseholder has complied with the repairing obligations in their lease. As a result, a leaseholder’s property which has fallen into disrepair (in breach of the repairing obligations in the lease) will not be devalued, and so the price will not be reduced by reason of their breach.
Secondly, it must be assumed that the participating leaseholder (or previous leaseholders) has not made any improvements to their property. As a result, the price will not be increased because the leaseholder has, at their own expense, made improvements to their property so that it is more valuable.
	Paragraph 19(3) sets out assumption 5, under which it must be assumed that the freehold being acquired in the collective enfranchisement is subject to any leasebacks that will be granted under Section 36 of the LRHUDA 1993 as part of the claim.
	Paragraph 19(4) allows other assumptions to be made when determining the market value provided, they are consistent with assumptions 4 and 5. Paragraph 19(5) sets out some relevant definitions.
	Paragraph 20 sets out that the price must be increased or reduced to reflect certain specified matters (when they arise) when determining the market value. Those specified matters include any defects in title to the relevant freehold or statutory lease, and any property rights that burden or benefit that title.
	Paragraph 21 applies where a leaseholder has a right to hold over under the Local Government and Housing Act 1989, but is not currently doing so. In these cases, the right to hold over is to be taken into account in determining the market value, but only if (a) the lease has five years or less remaining until its term date, and (b) the right to hold over is likely to be exercised by the leaseholder. (Under paragraphs 1(1) and 2 of Schedule 6, "term date" has the same meaning as in the LRA 1967 and the LRHUDA 1993, subject to the modification in paragraph 1(2) of Schedule 6.)
	Paragraph 22 covers two situations:
In a lease extension claim (under either the LRA 1967 or the LRHUDA 1993), where the standard valuation method is being used and the terms of the extended lease are different the terms of the leaseholder’s existing lease, the price must be increased or decreased to reflect the effect of the change in terms where necessary.
In a collective enfranchisement claim, where a qualifying tenant is also the owner of the immediately superior lease of their flat, the standard valuation method applies to the superior lease rather than the inferior lease.
	Paragraph 23 applies to freehold acquisition claims under the LRA 1967 and lease extension claims under both the LRA 1967 and LRHUDA 1993, where the qualifying tenant owns an intermediate lease (superior to their qualifying lease) which will be surrendered as part of their claim. In these cases, the sum produced by the application of the rest of Schedule 4 must be reduced to take account of the fact that the tenant already owned that intermediate lease. The reduced sum will be the market value.