First-tier Tribunal Determines Premium for Collective Enfranchisement

OUTCOME: Allowed

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : LON/00AY/OCE/2021/0185

HMCTS code (paper, video, audio) :

P:PAPERREMOTE Property : 55 [ADDRESS], [POSTCODE] Applicants : [redacted] [NAME], [COUNSEL] [NAME], [COUNSEL] : [COUNSEL], Solicitors Respondent : [redacted] : Missing Landlord Type of application : Sections 26 and 27 of the Leasehold Reform, Housing and Urban Development Act 1993 Tribunal members : Mr [NAME] Date of determination and venue : 2 February 2022 at 10 [ADDRESS] [POSTCODE] Date of decision : 2 February 2022

DECISION

Covid-19 pandemic: description of determination This has been a determination by remote hearing on the papers. The form of remote hearing was P:PAPERREMOTE. A face-to-face hearing was not held because no-one requested one, or it was not practicable, and all issues could be determined on paper. The documents that the tribunal was referred to are a bundle of 117 pages, the contents of which the tribunal has noted.

2 Summary of the tribunal’s decision (1) The appropriate premium payable for the collective enfranchisement is £16887.(sixteen thousand eight hundred and eighty seven pounds) Background 1. This is an application made by the applicant qualifying tenants pursuant to section 26 and 27 of the Leasehold Reform, Housing and Urban Development Act 1993 (“the Act”) for a determination of the premium to be paid for the collective enfranchisement of 55 [ADDRESS] [POSTCODE] (the “property”) where the Landlord cannot be found.

2. On 14 June 2021 the Croydon County Court ordered that the freehold shall be vested in such person or persons as may be appointed for that purpose by the Claimants on such terms as may be determined by the tribunal.

3. The case was transferred to the tribunal for a determination of the premium and terms of acquisition. The issues 4. In the absence of the Landlord there are no matters agreed. The applicants have submitted a valuation report prepared by Mr [NAME], dealing with the following matters: (a) The subject property is a three-storey semi-detached house converted into three self-contained flats. The ground floor flat consists of three bedrooms, lounge, kitchen, bathroom/WC and the floor area is approximately 66 m². The demise includes a section of the rear garden and a single parking space. (b) The first floor flat consists of two bedrooms, lounge, kitchen and bathroom WC and has a floor area of 59 m². The flat has a single parking space. (c) The second floor flat is a loft conversion and consists of an open plan living room/kitchen area, one bedroom and a bathroom/WC. The GIA is 44 m² and there is no allocated parking space. (d) There is a communal section of rear garden. (e) The valuation date is 26 June 2020 (f) Details of the tenants’ leasehold interests: Ground floor (i) the ground floor flat is held on lease for 125 years from 29 September 1993. A deed of variation dated 31 October 1997

3 altered the lease plan to show a rear extension and the private section of garden. The ground rent is £150 per annum with no review. (ii) The unexpired term at valuation date: 98.25 years.

First and second floors (iii) The term of each lease and ground rent is the same as for the ground floor. The tribunal regards these matters as uncontroversial and they are supported by documents in the bundle. The tribunal will consider the evidence on the following matters: (g) Capitalisation of ground rent: 6.50% per annum (h) Deferment rate: 5%. (i) Freehold value (j) Marriage value; ignored under Sch 6 of the Act (k) Development hope value; Nil (l) The premium payable. The hearing 5. The case was dealt with on the papers on 2 February 2022 with the necessary documents provided in a bundle by the Applicant’s representative.

6. The tribunal was not asked to inspect the property and the tribunal did not consider it necessary to carry out a physical inspection to make its determination.

7. The applicant relied upon the expert report and valuation of Mr [APPELLANT] dated 21 December 2021. Capitalisation rate 8. Mr [NAME] considers that capitalisation rates 6.5% are normal. Where there is higher income and good levels of growth on review rates can be lower. In this case the rent is modest and not scheduled to be reviewed and he sees no reason to change from that rate which he has agreed on numerous similar properties.

4 The tribunal’s determination 9. The tribunal determines that the rate to be used is 6.5%. Reasons for the tribunal’s determination 10. The tribunal notes that a rate of 6.5% has been used in Mr [NAME] experience and in the absence of any specific evidence to show that this should be varied in this case the tribunal will adopt this rate. Deferment rate 11. Mr [NAME] speaks to the [NAME] rate of 5%. The tribunal’s determination 12. The tribunal determines that 5% is appropriate as the deferment rate . Reasons for the tribunal’s determination 13. The tribunal sees no reason to depart from the [NAME] rate. Freehold value 14. Mr [NAME] values the freehold interest in the ground floor flat (55a) at £465,000, the first floor flat (55b) at £421,000 and the second floor flat (55c) £319,000. The total freehold value is £1,205,000. Mr [NAME] has added1% to the long leasehold values for each flat to arrive at a freehold figure. The tribunal’s determination 15. The tribunal determines that the reversionary value of the freehold interest in the ground floor flat is £465,000, for the first floor flat £421,000 and for the top floor flat £319,000. The total is £1,205,000 16. Reasons for the tribunal’s determination 17. Mr [NAME] has presented comparable properties for each size of flat which are summarised in the table below. The adjusted values are applicable to the subject properties and found by adjusting for date using the Land Registry index and for the presence or absence of parking and use of either a private garden or communal gardens and finally for size. The full adjustments are set out in Mr [NAME] report.

5 18. The tribunal has considered the evidence which it agrees is appropriate and accepts the adjustments made by an expert witness. Address date Description lease price Comment 3 bedroom flats [ADDRESS] 01/12/2020 2/3 bed split level 79 sq m no parking 999 yrs share of [NAME] £490,000 adjusted to £477,000 for date, size, parking and garden Fl 4 1 Alexander Dr SE19 31/07/2020 3 bed top floor flat 125 yrs from 2009 £470,000 adjusted to £437000 for larger size off set by no parking or garden and by date Fl 5 [ADDRESS]19 07/10/2020 3 bed top floor flat 125 yrs from 2009 £500,000 adjusted to £475000 for date, and size offset by no parking or garden [ADDRESS]19 07/10/2020 first floor 3 bed 189 yrs from 1997 £505,000 adjusted to £469000 for date, and size offset by no parking 2 Bedroom flats [ADDRESS] (Part of subject) 22/05/2018 First floor in subject property 125 yrs from 1993 £393,000 adjusted for date and freehold to £392,000 [ADDRESS] 15/10/2020 2 bed split level upper flat 999 yrs from 1986 Share of [NAME] £418,500 adjusted fro date and lack of parking to £411,000 Fl 3 15 Alexander Dr 29/04/2021 2 bed first floor flat 999 yrs from 2013, share of [NAME] £418,000 adjusted for date and no garden Fl 1 [ADDRESS] 06/03/2020 2 bed ground floor flat 125 yrs from 2006 £445,000 adjusted for date and lack of parking to £461000 1 Bedroom flats [ADDRESS] 27/09/2019 1 bed top floor flat 189 yrs from 1974 £ 315,000 adjusted to £326,000 for date and communal garden [ADDRESS]19 13/08/2021 1 bed ground floor flat with own garden 125 yrs from 2009 £ 327,500 adjusted to £315,000 for date and garden Fl c [ADDRESS] 20/05/2021 1 bed top floor flat 125 yrs from 1999 £ 330,000 adjusted to £329,000 for date and no communal garden [ADDRESS]19 26/03/2021 1 bed ground floor flat no parking or garden 999 yrs from 2013 [NAME] £ 305,000 adjusted to £306,000 for date and no garden

Development hope value 19. The tribunal determines that there is no development hope value to be included in the calculation. Reasons for the tribunal’s decision 20. This is a semi-detached property which is fully utilised by the subject flat and there is no development potential.

6

The premium (2) The tribunal determines the appropriate premium to be £16,887. (sixteen thousand eight hundred and eighty seven pounds). 21. A copy of its valuation calculation is annexed to this decision.

Name: [NAME]: 2 February 2022

7 Appendix: Valuation setting out the tribunal’s calculations

Address Case Reference Valuation Date 26 June 2020 Three flats on similar terms Existing lease Expiry Date 28 September 2118 Years unexpired 98.25 Existing Ground Rent £450 £ 150 per flat Basis of review Freehold value £1,205,000 Extended lease value Capitalisation Rate 6.50% Deferment Rate 5.00% Term Value Term 1 Ground rent 450.00 £ YP 98.25 Years @ 6.50% 15.3530 PV of £1 0 Years @ 5.00% 1.00

Term Value 6,909 £ Reversion value Reversion to freehold value £1,205,000 Pv of £1 98.25 Years @ 5.00% 0.008281

Reversion value 9,979 £ Total Premium payable 16,887 £ [ADDRESS]19 Basic Information LON/00AY/OCE/2021/0185

8 Rights of appeal

By rule 36(2) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013, the tribunal is required to notify the parties about any right of appeal they may have. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber), then a written application for permission must be made to the First-tier Tribunal at the regional office which has been dealing with the case. The application for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the person making the application. If the application is not made within the 28 day time limit, such application must include a request for an extension of time and the reason for not complying with the 28 day time limit; the tribunal will then look at such reason(s) and decide whether to allow the application for permission to appeal to proceed, despite not being within the time limit. The application for permission to appeal must identify the decision of the tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal and state the result the party making the application is seeking. If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).