Hedonic regression is a statistical method used to isolate the effect on value of a single variable. In the case of lease extension, it is the unexpired length of the lease.
A hedonic regression model for lease extensions was created by Parthenia Valuation, ‘the Parthenia Model’. It had been used to determine ‘relativity’ i.e. the relative value of a property held on an existing long lease compared to its ‘freehold vacant possession value’; and is intended to provide, as the 1993 Act requires, a ‘no act world’ when it comes to valuing for lease extension.
In Trustees of the Sloane Stanley Estate v Mundy [2016] the Upper Tribunal (Land Chamber) it was held that the Parthenia Model should no longer be used. However, the case is being appealed to the Court of Appeal.
More information you might find useful:
- Lease Extension – Getting Started
- More Frequently Asked Questions on Lease Extension
- Lease Extension Calculator
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