A change to International Accounting Standards has saved UK property companies from losing billions of pounds on the value of portfolios.
The International Valuation Standards Committee has helped to persuade the International Accounting Standards Board to allow companies to include long leaseholds in their accounts at market value.
Previously, the IASB had excluded long leaseholds from its rulings on investment property – IAS 40. Instead, they were included in the regulations on operating leases – IAS 17.
This meant that property companies would have to value long leaseholdings at cost and depreciate their value.
UK companies will not have to adopt IAS until 2005.
