35  Residual Value

The following is suitable drafting for residual value and represents new provisions to be inserted into the HPP.  Readers should refer to the appendix to this Guidance before using this drafting.

Authority's Residual Value Overage Share means [♦ per cent (♦%)]32 of the Residual Value Overage (if any);

Contractor Default Residual Value Sum means the Residual Value Sum discounted back at the Termination Date Discount Rate from the date on which the Residual Value Sum is shown to be payable in the Base Case to the Termination Date;

Contractor's Residual Value Overage Share means [♦ percent (♦%)]33 of the Residual Value Overage (if any);

Discounted Residual Value Sum means the Residual Value Sum discounted back at the [♦]34 from the date on which the Residual Value Sum is shown to be payable in the Base Case to the Termination Date;

Estimate Date has the meaning given to it in clause 1.1 (EUV-SH of the Leases);

EUV-SH of the Leases means the estimated amount for which the premises comprised in and demised by the Leases would exchange at the Estimate Date between a willing buyer and a willing seller, in an arm's length transaction, after proper marketing wherein the parties had each acted knowledgably, prudently and without compulsion, as determined in accordance with clause 1 (EUV-SH of the Leases) on the following basis:

(a)  the premises will continue to be let by a body and used for social housing;

(b)  at the Estimate Date, any regulatory body, in applying its criteria for approval, would not unreasonably fetter the vendor's ability to dispose of the premises to organisations intending to manage their housing stock in accordance with that regulatory body's requirements;

(c)  premises temporarily vacant pending re-letting should be valued, if there is a letting demand, on the basis that the prospective purchaser intends to re-let them, rather than with vacant possession; and

(d)  any subsequent sale would be subject to all of the above assumptions,

or such other meaning as the Royal Institution of Chartered Surveyors may, from time to time, attribute to the term EUV-SH (Existing Use Value for Social Housing);

Expiry Option shall have the meaning given to it in clause 46.1(b) (Assets and Transition to the Authority or to another contractor);

Expiry Option Notice shall have the meaning given to it in clause 46.1(b) (Assets and Transition to the Authority or to another contractor);

Residual Value Overage means, in circumstances where the EUV-SH of the Leases is greater than the Discounted Residual Value Sum, the EUV-SH of the Leases less the Discounted Residual Value Sum;

Residual Value [Site/Phase] Sums means [insert value for each [Site/Phase]35 and the expression Residual Value Site Sum shall be construed accordingly;

Residual Value Sum means the sum total of each Residual Value [Site/Phase] Sum less (if any) any Residual Value [Site/Phase] Sum(s) relating to any Site(s) in respect of which a Lease is not granted by the Authority;

Termination Option shall have the meaning given to it in clause 46.1(a) (Assets and Transition to the Authority or to another contractor);

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32  To be set by the Authority or bid back by bidders.

33  To be set by the Authority or bid back by bidders.

34  To be set by the Authority or bid back by bidders.

35  This is needed if leases are to be granted at different times on a phased or site by site basis.  Values to be bid back by bidders.