Transcript Calculation of Rent for the Ijara Lease CLIVE RIDING MONTAGU EVANS Property Owner Ijara Lease Propco Occupational Leases Prophold Owner.

Calculation of Rent for the Ijara Lease
CLIVE RIDING
MONTAGU EVANS
1
Property
Owner
Ijara Lease
Propco
Occupational
Leases
Prophold
Owner
2
Conventional
Lending Bank
Loan £600k
Vendor
Sale for
Interest £50k pa
Property Owner
£1m
Rent £50k pa
Ijara
Agreement/
Lease
£400k
premium
paid under
Ijara
Agreement
for Lease
Propco
Rent £70k pa
Occupational Tenants
3
Example
Rent received
£70,000 pa
Rent paid
£50,000 pa
£20,000 pa
Y.P. 5 Years 8%
3.99
£79,800
Reversion to
£70,000
Less rent paid for the rest of term
60 yrs
-5 yrs
55 yrs
X
£70,000 – X
Profit rent for remainder of term
(£38,220)*
YP for 55 yrs @ 8%
12.32
PV for 5 yrs @ 8%
0.68
8.3776
Premium paid under Ijrara
£320,000
Agreement for Lease
£400,000
*£320,000 ÷ 8.3776
X = £70,000 -£38,220 = £31,780 pa
Ijara rent would be £31,780 pa (£7,945 per quarter)
4a
Example/cont’d
Rent received
£70,000
1st Element
£50,000 pa
Rent paid £12,500 x 4
£15,000 pa
2nd Element
£65,000 pa
Less excess insurance premium
£5,000 pa
£60,000
Profit rent
£10,000
YP 2 years @ 8%
1.783
£17,830
Reversion to
£92,000
Less rent paid
£50,000 pa
2nd Element
£15,000 pa
£65,000 pa
Less excess insurance premium
£ 5,000 pa
£60,000
Profit Rent
£32,000
YP 3 years @ 8%
2.577
PV 2 years @ 8%
0.857
2.2
£70,400
£88,230
4b
Example/cont’d
£88,230
Reversion to
£92,000
Less rent paid
X
Profit rent
£92,000 - X
Profit rent for remainder of the term
(£40,115)*
YP 55 years @ 8%
12.32
PV 5 years @ 8%
0.68
8.37
£335,700
£424,400
Less purchasers
costs @ 5.765%
£ 24,466
£400,000
£335,700 ÷ 8.37
X = £92,000 - £40,115 =
£51,885
£15,000
£36,885 pa
Ijara rent would be £36,885 pa (£9,221 per quarter)
Calculation of Rent for the Ijara Lease
CLIVE RIDING
MONTAGU EVANS