The IPF Report on Turnover-based leases, explored the impact of a switch to turnover-based rents on published market yields and market rental value growth.

The report concluded that prime net initial yields should be quoted net of (estimated) non-recoverable costs and inclusive of (estimated) turnover, with these assumptions published alongside.

The report also concluded that the calculation of market rental value growth is unaffected by the move to turnover-based leases. But additional series are required on the key terms of a turnover-based lease and the turnover rent paid (as a percentage of rent) in order for capture the expected turnover element of the rent.

The summary version (full version for IPF members only) of the IPF Report: Turnover-based leases, the issues, drivers and challenges, a survey of best practice can be found at

https://www.ipf.org.uk/resourceLibrary/turnover-based-leases-survey-of-current-practice–october-2021–summary-report.html