[1] The rate is a key component of the calculation used to determine the cost of leasehold enfranchisement.
[2] The landlord owns a 'reversion', i.e. at the end of the lease, they will have exclusive possession of the property which they can then sell or rent.
If the lessee is enfranchised, that is, gets absolute and perpetual possession of the property, the landlord will lose the reversion value.
The Leasehold Reform Act 1967 (houses) and the Leasehold Reform, Housing and Urban Development Act 1993 (for flats) aim to ensure that the landlord has fair compensation for this loss of value.
[3] Computing the amount of compensation requires estimating the value of deferred possession of the property – the value of the property now minus the lost income or use for the period of the lease ('jam today is worth more than jam tomorrow').