First-tier Tribunal Sets Freehold Acquisition Price

OUTCOME: Allowed

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Case Reference : CAM/26UD/OAF/2019/0001

Property : 43 & 45 [ADDRESS] [POSTCODE]

Applicants : [redacted] : [COUNSEL] of [NAME] instructed by [NAME] solicitors for the Applicants

Respondent: [redacted] : [NAME] to determine the price payable under section 9 and 27 of the Leasehold Reform Act 1967

Tribunal Members : Tribunal Judge Dutton

Miss M Krisko BSc (Est Man) FRICS

Date of Decision : 7th June 2019

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DECISION ____________________________________

© CROWN COPYRIGHT 2018

DECISION

The Tribunal determines that the price payable for the freehold of the Property being 43 and 45 [ADDRESS] [POSTCODE] and Palletts Orchard, [ADDRESS] to be £19,215 as set out on the valuation prepared by Mr [NAME], Chartered Surveyor. FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

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BACKGROUND

1. On 30th January 2019 the applicants Mr and Mrs [NAME], the leaseholders of the Property, made [NAME] to the County Court at Luton seeking the right under Part 1 of the Leasehold Reform Act 1967 (the Act) to acquire the freehold of the Property.

2. On 18th February 2019 at the County Court at Luton Deputy District Judge Stonham gave the applicants leave to make an [NAME] to this tribunal for the determination of the price payable under section 9 of the Act. The terms of the conveyance were as set out on the draft transfer annexed to the Order.

3. We were provided with a bundle of papers for this matter to be considered as a paper determination in the week commencing 3rd June 2019. The bundle included the directions, the valuation report from Mr [NAME] dated 2nd May 2019 with various attachments, and the court papers with exhibits. [ADDRESS] order referred to above was also included.

4. The Order of the Court requires us to consider the price to be paid for the Property which is described at 43 and [ADDRESS], Aston, Hertfordshire and land known as Palletts Orchard, [ADDRESS], Aston. The applicants acquired their leasehold interest in 43 and [ADDRESS] on 29th November 1991. The land known as Palletts Orchard falls into two title numbers, HD574194 and HD572057 and was acquired by the applicants on 20th November 2017.

5. In a witness statement made by Mr [NAME] we are told that the house and land was held under a lease created in October 1564 for an original term of 500 years. the rent is apparently a peppercorn.

6. In the report of Mr [NAME] we found details of the history of the Property. The house is a Grade II* building being of historical interest. He confirmed the basis of the valuation should be under section 9(1) of the Act, the rateable value of the Property not exceeding £500 as at 31st March 1990.

7. His views on the assessment of the price to be paid was that it should be assessed on a three step basis, following the Upper Tribunals decision in Clarise [2012] UKUT 4LC. He put forward 5 comparable properties which he analysised to give a price of £765,000 for the market value of the Property.

8. On the question of capitalisation and deferment rates he considered that the percentage rates for capitalisation of the section 15 rent at first reversion should be the same as that adopted for decapitalising the site value. He found support for this in an Eastern Case at White Gates, [NAME].

9. As to the Modern Ground rent he assessed the site value at 30% of the market value giving a figure of £229,500. There was support for this in a near by building plot at 2 Stringer Labe which sold for £230,000 on 3rd March 2017, just under a year before the valuation date in this case.

3 10. Having assessed the site value at £229,500 he then applied the appropriate rate, which he considered to be 6% based on the most recent [RESPONDENT] case in Aston.

11. As to the second reversion, the value of the standing house after 50 years extension, ie. in around 95 years which considered would be significantly greater than the site value. He did however think it necessary to make a deduction of 10% to reflect the potential for the tenant to remain in occupation at the termination of the lease. After reciting the passage of cases impacting on the level of deferment rates he concluded that in this case a rate of 5.5% would be appropriate.

FINDINGS

12. We consider that the price assessed by Mr [NAME] is appropriate. We do have one or two concerns but these do not impact on our acceptance of Mr [NAME] opinion on the price to be paid.

13. The Order from the Court defines the Property to include Pallets Orchard, held under two separate titles, which were acquired by the applicants in December 2017. It is not residential. It would appear that the title to this land starts with the 500 year lease under which the house is also held. The applicants have not owned the land for two years. However, the Court has required us to reach a value for the Property including this land and we do so. Mr [NAME] has accepted the position on the assumption that the land did fall under the same lease, an assumption which seems reasonable to make.

14. We note that it is suggested that in the East Anglian region the pricing sentiment is negative. We are not sure that a property in Aston would be so affected but do not consider it an issue which requires us to challenge the valuation put forward by Mr [NAME].

15. His use of comparables is helpful and we have noted those. We are content with the percentages he has used for assessing the site value and the capitalisation and deferment rates throughout. The allowance of 10% for the provisions of schedule 10 to the Local Government and Housing Act 1989 (holding over by a tenant) is reasonable.

16. Accordingly, as required by the Order of the Court dated 18th February 2019 we have determined that the price to be paid for 43 and [ADDRESS] and [ADDRESS] is £19,215, which sum must be paid into the Court.

Judge: A A Dutton Date: 7th June 2018

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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.