First-tier Tribunal Determines Freehold Price for Missing Landlord Property

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference : MAN/00BR/OAF/2024/0027 Property : 74 [ADDRESS], [POSTCODE] Applicant : [redacted] : [APPELLANT] Respondent : [redacted] Type of Application : Houses and Premises – Leasehold Enfranchisement: [NAME] S21(1)(cza), S 21(2) and S27(5) of the Leasehold Refrom Act 1967 Tribunal Members : Valuer Chair: [NAME]: [NAME] of Determination : 18th February 2025 Date of Decision : 18th February 2025

DECISION

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The Tribunal determines that the total price to be paid, in accordance with section 27 (5)(a) of the Leasehold Reform Act 1967, for the freehold interest in 74 [ADDRESS], [POSTCODE] is £143.00

REASONS

Background

1. The Tribunal has received an application under sections 21(1)(cza), 21(2) and 27(5) of the Leasehold Reform Act 1967 (“the Act”). The application arises following an application made to the County Court for a Vesting Order in the case of a [NAME]. On the 30th April 2024 District Judge Royle sitting at the County Court at Leeds ordered that the Applicants may apply to the First-tier Tribunal (Property Chamber) for the determination of the price payable for the Freehold interest in accordance with Section 27(5)(a) of the Act. This is the sole issue for the Tribunal to determine.

2. The Tribunal is provided with a bundle of documents in support of the application including; witness statements, title register and plans, the lease, correspondence with Yorkshire Water, Court Orders, application form, statement of case and expert valuation evidence.

3. No submissions have been received for an oral hearing and the application form confirmed that the applicant was content with a paper determination, accordingly the determination has been decided on the papers.

4. The Tribunal have not inspected the property.

The Law

5. Section 27(5) of the Act provides: The appropriate sum which in accordance with Section 27(3) of the Act to be paid in to Court is the aggregate of: a. Such amount as may be determined by (or on appeal from) the appropriate Tribunal to be the price payable in accordance with Section 9 above; and

b. The amount or estimated amount (as so determined) of any pecuniary rent payable for the house and premises up to the date of the Conveyance which remains unpaid The Property and Lease

6. The property is 74 [ADDRESS], [POSTCODE]. It is held on a long lease with title number: SYK106760. The lease is dated 19th October 1960 for a term of 800 years from the 25th March 1960. The ground rent is fixed at £10.00 per annum. The original parties to the lease are (1) [NAME] and (2) [NAME]

3 [NAME] and [NAME]. On the 14th January 1980 the lease was assigned to the sole name of [APPELLANT] (the Applicant).

7. The property is described as a semi-detached two storey house with front and rear gardens. It is said to comprise a kitchen, reception room, three bedrooms and bathroom/wc. The site is said to be fully developed.

The Premium

8. The Tribunal is required to determine the premium payable for the Freehold Interest, calculated in accordance with section 9 of the Act. Section 9 sets out the premium to be paid to enfranchise and the valuation basis to be adopted. The valuation date is the 8th September 2023 (being the issue date of the application to the County Court), therefore a term remaining of circa 736.52 years.

9. To support the application the Tribunal is provided with a valuation report prepared by Mr [NAME] of [COMPANY], dated 28th August 2024. The valuation report is prepared as an Expert Witness Report and contains a statement of truth and declaration as required by Rule 19 of the Tribunal Procedure (First-tier Tribunal)(Property Chamber) Rules 2013.

10. Mr [NAME] carries out a valuation under section 9 (1) of the Act. He prepares a 3 step valuation in accordance with S.9 (1), however, given the long lease term remaining there is no value to the first or final reversions. The value derives from the capitalisation of the ground rent being £10 per annum for the remainder of the term. Mr [NAME] adopts a valuation date of 30th April 2024 resulting in an unexpired lease term of 735.89 years and capitalises the ground rent at 7% per annum. The yield choice he adopts is explained by reference to the decision in Nicholson v Goff [2007] 1 EGLR 83.

11. Mr [NAME] arrives at a value of £142.86, which he rounds to £140.00 and reports £140.00 as the premium payable under s.9 (1) of the Act.

12. The Tribunal have first considered the valuation basis to be adopted. To be valued under section 9 (1), the house and premises must be within the financial limits specified under s.1 (1)(a), 1(5) or 1(6) of the Act, it must be at a low rent within s.4 (1) of the Act and the rateable value of the house and premises on 31 March 1990 must be £1,000 or less in Greater London or £500 elsewhere.

13. Within the bundle, correspondence is provided from Yorkshire Water that confirms that the Rateable Value was £125 on the 31st March 1976 and this is the only date that the Rateable Value has been established for.

14. The appropriate day under s.1 (1)(a) is 23rd March 1965 (s.1 (4)). The Rateable Value is not known at this date, however we consider that it was likely to be similar to or less than the Rateable Value of £125 at the 31st March 1976. At the appropriate day, the Rateable Value had to fall below £200, and accordingly it meets the test under s.1 (1)(a)(i) and s.1(6).

4 15. The ground rent is £10 per annum. To meet the low rent test in s. 4 (1) the rent must be less than two-thirds of the Rateable Value and the property is therefore considered to be let at a low rent.

16. Finally, the Rateable Value on the 31 March 1990 must be less than £500 and based upon the Tribunal’s knowledge and experience this is considered likely. Based on the information available, the Tribunal accepts the valuation basis as s. 9(1) and considers that given the long lease term remaining, the difference in premium between the original and special valuation basis (s.9(1A)) would not be significant in the circumstances, namely the long lease term remaining.

17. The Tribunal agrees with the approach taken by Mr [NAME]. There is no value to the first reversion or ultimate reversion due to the long lease term remaining. Accordingly, the ground rent of £10 per annum is to be capitalised for the remainder of the term, being 736.52 years. We adopt a capitalisation rate of 7% to arrive at £142.86, say £143.00.

18. The Tribunal is not asked to determine the pecuniary rent payable in accordance with s.27 (5)(b) of the Act.

Signed: [NAME] of the First-tier Tribunal Date: 18th February 2025

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference : MAN/00BR/OAF/2024/0027 Property : 74 [ADDRESS], [POSTCODE] Applicant : [redacted] : [APPELLANT] Respondent : [redacted] Type of Application : Houses and Premises – Leasehold Enfranchisement: [NAME] S21(1)(cza), S 21(2) and S27(5) of the Leasehold Refrom Act 1967 Tribunal Members : Valuer Chair: [NAME]: [NAME] of Decision : 20th March 2025

CORRECTION CERTIFICATE

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19. At Paragraph 1 of the decision dated 18th February 2025, the date of District Judge Royle’s order of “30th April 2024”, should instead read “26th April 2024”.

Signed: [NAME] of the First-tier Tribunal Date: 20th March 2025