Abstract
PurposeThe purpose of this paper is to comment upon the relatively straightforward but often contentious practice of allowing for costs on the capital value derived by the investment model of property valuation.Design/methodology/approachThis education briefing is an explanation of the discounting process to allow for costs used in practice.FindingsAlthough, the deduction of cost is a simple use of algebra, often valuers (and, in particular, students) fail to make the allowance correctly.Practical implicationsThe process of allowing for cost is a simple heuristic based on market averages for various individual costs such as agents’ fees and legal fees (including VAT) and property taxation (stamp duty).Originality/valueThis is a review of existing models.
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