What Is Term and Reversion?
Term and reversion is an income-approach valuation method, common in UK and Commonwealth appraisal practice, that values a leased property in two separate parts: the "term" (income from the current, often below-market, rent until the next rent review) and the "reversion" (income at the higher estimated market rent once the lease reverts).
Why it matters
This two-stage method is especially useful when a property's passing rent is well below its estimated rental value, since capitalizing the whole income at one flat rate would understate the property's true value.
Related Terms
More Commercial & Appraisal Terms
This definition is provided for general educational purposes and is not financial, legal, tax, or real estate advice. Verify important decisions with appropriately qualified professionals.
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