Capitalisation rate
This rate is used to calculator the multiplier to generate value of the ground rent. There are LVT decisions ranging from 5% to 10%. This variance depends on the level of rent and the frequency and the amount of the review. There are properties in prime central London (PCL) where the level of ground rent is a proportion of the market value or annual rent if the flat is let on a short term tenancy, such as an AST. The calculator solely works off 7%. Again, the higher rate, the lower the premium.