First-tier Tribunal Sets Fair Premium for Collective Enfranchisement

OUTCOME: Allowed

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference : LON/00AH/OCE/2022/0023 HMCTS code (paper, Video, audio)

Property :

P:PAPERREMOTE

: 5 [ADDRESS], [POSTCODE]

Applicant : [redacted] : In Person Respondents : [redacted] : Missing Landlord Type of [NAME] :

Sections 26 and 27 of the Leasehold Reform, Housing and Urban Development Act 1993 Tribunal Member :

[NAME] (Hons) LLM Property Law MA FRICS

Date of determination and venue: 6th April 2022 Date of Decision: 6th April 2022

DECISION

This has been a remote paper determination, which has been consented to by the parties. A face-to-face hearing was not held because it was not practicable and no one requested same.

The documents the Tribunal were referred to were in a bundle of some 174 pages.

Summary of the tribunal’s decision

(1) The appropriate premium payable for the collective enfranchisement is £55,200. (Fifty-five thousand and two hundred pounds) Background 1. This is an [NAME] 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 5 [ADDRESS], [POSTCODE] (the “property”) where the Landlord cannot be found. The issues 2. In the absence of the Landlord there are no matters agreed. The applicants have submitted a valuation report prepared by [NAME] [NAME] [NAME] (a) The subject property is a semidetached Victorian building over two floors, subsequently converted into two self-contained flats. Construction is traditional brick elevation and butterfly roof. The accommodation comprises ground floor entrance hall, servicing both flats. For Flat 1, 67.1 m 2, there is an entrance hall, lounge, two double bedrooms, a kitchen, bathroom with WC. Outside a section of rear garden and communal parking area. For flat 2, 71.24 m2, again two double bedrooms, lounge, kitchen and bathroom with WC. Outside a section of rear garden and communal parking. (b) The valuation date is 31st January 2022. (c) Details of the tenants’ leasehold interests:

Flat 1 and Flat 2 comprise separate leases with identical terms. These are, 99 years from 29th September 1988, ground rent from 1988 to 2021 £75 pa, from 2021-2054 £150 pa, from 2054-2087 £250 pa. 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: (d) Capitalisation of ground rent: (e) Deferment rate: (f) Freehold value (g) Development hope value. Nil (h) The premium payable.

The hearing 5. The case was dealt with on the papers on 6th April 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 [APPELLANT] of [NAME] dated 9th March 2022. Capitalisation rate 8. [NAME] considers that capitalisation rates 6.5% are normal. The rent is modest and reviews are at 33 years apart. 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 [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. [NAME] applies the Sportelli 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 Sportelli rate. Freehold value 14. [NAME] values the freehold interest in the ground floor flat, flat no 1 as £ 277,750, the first-floor flat no 2 at £267,500. The tribunal’s determination 15. The tribunal determines that the reversionary value of the freehold interest in the ground floor flat no 1 as £277,750, and for the first-floor flat no 2 as £277,750. Reasons for the tribunal’s determination 16. The comparable evidence represented in the report supports these figures. Development hope value 17. The tribunal determines that there is no development hope value to be included in the calculation. Reasons for the tribunal’s decision 18. The property is fully utilised by the subject flat and there is no development potential. Appurtenant land

19. A nominal figure of £50.00 was added for appurtenant land. Reasons for the tribunal’s decision 21. The nominal figure is accepted by the tribunal. The premium 20. The tribunal determines the appropriate premium to be £55,200.00 21. A copy of the valuation is annexed to this decision. [NAME]: [NAME] 6th April 2022

ANNEX – RIGHTS OF APPEAL

1. 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 at the Regional Office which has been dealing with the case.

2. 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].

3. If the [NAME] is not made within the 28-day time limit, such [NAME] must include a request to 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.

4. The [NAME] for permission to appeal must identify the decision of the Tribunal to which it relates (ie 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