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.