First-tier Tribunal Grants Collective Enfranchisement Application

OUTCOME: Allowed

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : LON/OOBA/OCE2021/0175 [ADDRESS], [POSTCODE] Applicant : [redacted] : [COUNSEL] Respondent : [redacted] Representative : NA Type of [NAME] : Section 27 of the Leasehold Reform, Housing and Urban Development Act 1993 Tribunal members :

Judge Shepherd Kevin Ridgeway MRICS

Date of determination and venue : at 10 [ADDRESS] [POSTCODE] on the papers Date of decision : 12th January 2022

DECISION

Summary of the tribunal’s decision The appropriate premium payable for the collective enfranchisement is £30200. The transfer deed is approved.

2 Background 1. This is an [NAME] made by the applicant leaseholders pursuant to section 27 of the Leasehold Reform, Housing and Urban Development Act 1993 (“the Act”) for the collective enfranchisement of 18 [ADDRESS], [POSTCODE] (the “premises”).

2. On 23rd November 2021 Tribunal Judge Martynski sitting as a judge of the County Court made an order pursuant to s.26 and 27 of the Act to the effect that the Applicants were entitled to the collective enfranchisement of the premises. The freeholder landlord is missing. The case was transferred to the Tribunal to determine the appropriate sum to be paid by the Applicants and to approve the transfer deed. The premises

3. The premises consist of two flats, 18 and 18A. The flats are approached across a common hallway and up a common stairway. The flats are small one bedroom units on the first floor of the building.

4. The Tribunal did not inspect the property but assistance was provided by plans and photographs attached to the report of the valuer acting on behalf of the Applicants, [NAME]. The Tribunal are familiar with the location which is on the West side of [ADDRESS] close to transport facilities. The tribunal’s determination

5. The tribunal determines that the value of the collective enfranchisement at the date of the [NAME] was £30200.

3 Reasons for the tribunal’s determination 6. The right to collective enfranchisement is conferred by Ch 1 of Pt 1 of the 1993 Act. By exercising the right the tenants acquire the freehold of the premises in question. The tenants pays a premium which compensates the landlord for the loss of the freehold. In the present case the landlord is missing and the procedure pursuant to ss 26 and 27 of the Act has been followed.

7. The price for the collective enfranchisement is calculated in accordance with Sch 6, of the Act and is the aggregate of the following figures : (a) The value of the freeholder’s interest in the premises ; (b) The freeholder’s share of the marriage value; (c) Any amount of compensation payable.

8. Whilst the Tribunal noted the comments made in Mr [NAME] valuation report, it was not convinced by his remarks.

Accordingly, it has chosen to follow the Upper Tribunal precedent in the [NAME] case and applied a relativity of 81.25%. The premium 9. The tribunal determines the appropriate premium to be £30200 A copy of its valuation calculation is annexed to this decision.

10. The Tribunal approves the transfer deed.

Name: Judge Shepherd Date: 12th January 2022

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Appendix: Valuation setting out the tribunal’s calculations

Valuation for [ADDRESS], [POSTCODE]

Valuation Date

18/02/2020

Lease Commencement

25/12/1985

Lease Term

99.00 years Expiry Date 24/12/2084 Unexpired Term

64.85 years

Long Lease value

£255,000

Freehold VP value

£257,550 +1% long lease value

Term 1 Term 2 Term 3

Ground rent

£50.00 £100.00 £200.00 Reversion years

2.83 33.00 34.00

Capitalisation rate

7%

Deferment rate

5%

Compensation

£100.00

Relativity

81.52%

No. 18

Diminution of Landlord's interest

Ground rent

£50

[NAME] 2.83 yrs @ 7.00% 2.489412649

£124

Rent Review 1

£100

[NAME] 33.00 yrs @ 7.00% 12.75379002

PV of £1 2.83 yrs @ 7.00% 0.825741115

£1,053

Rent Review2

£200

[NAME] 34.00 yrs @ 7.00% 12.85400936

PV of £1 35.83 yrs @ 7.00% 0.0885481

£228

Reversion to VP value

£257,550

PV 64.85 yrs @ 5.00% 0.04225460

£10,883

Value existing freehold

£12,288

Page Break

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Landlord's share of Marriage Value

Val. Tenant's new interest

£257,550

Less

Val. tenant's interest existing lease Relativity 81.52% £209,955

Val. l/lord's interest existing lease

£12,288

£222,243

£35,307

Marriage Value @ 50%

£17,654 Compensation

£100

£30,042

No.18a

Diminution of Freeholder’s interest

Reversion

£272,000

PV 153.85 Yrs @ 5.00% 0.00055

£150 Premium

£30,192

Say £30,200

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 [NAME] for permission must be made to the First- tier Tribunal at the regional office which has been dealing with the case.

6 The [NAME] for permission to appeal must arrive at the regional office within 28 days after the tribunal sends written reasons for the decision to the [NAME]. If the [NAME] is not made within the 28 day time limit, such [NAME] 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 [NAME] for permission to appeal to proceed, despite not being within the time limit. The [NAME] 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 [NAME] the [NAME] is seeking. If the tribunal refuses to grant permission to appeal, a further [NAME] for permission may be made to the Upper Tribunal (Lands Chamber)..