First-tier Tribunal Sets Freehold Interest Price at £10.00 Under Leasehold Reform Act 1967

OUTCOME: Allowed

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case reference : CHI/45UD/OAF/2024/0002

Property : [ADDRESS], [POSTCODE]

Applicant: [redacted]

Respondent: [redacted]

Type of application : Determination of the amount to be paid into

Court for the freehold interest under the

Leasehold Reform Act 1967, where the

Landlord cannot be found

Tribunal member : [NAME] of decision : 11 October 2024

DECISION

© CROWN COPYRIGHT 2024

Decision of the Tribunal

The Tribunal has determined for the reasons set out below that the price payable by the Applicant for the freehold reversion of the property is to be the sum of £10.00.

Background

1. By an order made by Judge Dobson sitting as a Judge of the County Court exercising the jurisdiction of a District Judge sitting at [ADDRESS], [POSTCODE] on 25 April 2024 the Court issued a Vesting Order under section 27 of the Leasehold Reform Act 1967 for the sale of the freehold of the Property to the Claimants on such terms as may be determined by the First-tier Tribunal.

2. By the same Order the Court directed that the matter be transferred to the First-tier Tribunal to determine the price payable for a conveyance under the provisions of Section 21 of the Leasehold Reform Act 1967.

3. The Applicant indicated that he was content with a paper determination.

4. An inspection of the property has not been made by the Tribunal, such having neither been requested by the Applicant nor considered necessary or proportionate by the Tribunal.

5. The applicant relies upon a valuation report prepared by Mr [APPELLANT] of [NAME] dated 15 May 2024.

The Lease

6. The property is identified on the HM Land Registry plan edged red under title number SY381347 and is held by way of a lease for a term of 1001 years from 25 March 1666, made between [NAME] of [NAME] as Lessor and [NAME] as Lessee. The lease is subject to a yearly rent of 30 shillings, the modern day equivalent being £1.50.

7. By an Assignment dated 27 March 1935 made between [NAME] and [NAME] the rent was expressed to be apportioned between the land in this title and other land. By an Assignment dated 22 November 1968 the rent was expressed to be further apportioned.

8. An extended garden forms part of title number SY807068, which is held by way of a lease for a term of 1001 years from 25 March 1660 and made between [NAME] and [NAME].

9. Adjoining land, known as “the Meadow” and which lies further to the north and on the other side of the hedge surrounding the cottage, is classed as primarily agricultural land and, in the opinion of the Applicant’s counsel, does not facilitate the use of the cottage as a house. Accordingly, counsel advise that such land is very unlikely to be regarded as part of the

premises of the cottage for enfranchisement purposes. The Tribunal agrees.

The Law

10. 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.

11. Section 9 of the Act sets out in detail the assumptions to be made and the procedure to be followed in carrying out the valuation. The effect of Section 27(1) is that the valuation date is the date on which the application was made to the Court.

12. There are various bases set out in Section 9 of the Act. The Tribunal determines that the appropriate basis is in subsection 9(1) being that on 31 March 1990 the Rateable value of the house and premises was not above £500.00.

The Property

13. The Tribunal is grateful to the Applicant and their Expert Valuer for providing a comprehensive description of the property, accompanied by external photographs, and particulars of the comparable evidence relied upon.

14. The property, as described by the Applicants’ expert, is a detached two storey house of traditional construction which was built in 1954 and extended in 1969. Accommodation comprises a porch, entrance lobby, cloakroom, two reception rooms, kitchen, utility and conservatory at ground level, and three bedrooms and a bathroom on the first floor. The floor area is said to be 161.46 m2.

15. The property is connected to mains water and electricity. Heating is oil-fired. Foul drainage is to a private waste-water treatment plant within the grounds.

16. The property has a double garage built in 1973, and a conservatory and utility room were added in the 1980s. There is a private drive with parking and garden and grounds, predominantly to the east of the house. There is a range of lightweight garden sheds and a greenhouse. The site is said to extend to some 0.41 acres.

17. Approximately thirty years ago, the north boundary of the grounds was repositioned further away from the house by approximately 10m to enlarge the garden, taking in part of the field. The expert’s valuation report includes the enlarged garden area within the enfranchisement valuation submitted.

18. The property is said by the Applicant’s expert to be in a basic condition and requiring refurbishment.

19. The property lies on the east side of [ADDRESS] in a predominantly rural area, approximately two miles from [NAME] and eight miles from Godalming. A location plan was provided.

The Valuation

20. In a valuation report dated 15 May 2024 Mr [NAME] determined that the value for the purpose of section 27 of the Act as at 25 April 2024 is £10.00. Mr [NAME] stated that he had inspected the property on the 7 November 2023.

21. Mr [NAME] calculated the unexpired term of the lease as 636 years.

22. The Tribunal agrees.

23. Since the lease was granted, the land has been divided and the ground rent apportioned. In Mr [NAME] opinion it is not possible to ascertain with certainty the rent due for the apportioned part of the land being enfranchised. As such, Mr [NAME] adopts the full sum of £1.50 in his calculations, an approach the Tribunal agrees.

24. Mr [NAME] adopts a capitalisation rate of 15% to the rent and provides his explanation of such. Whilst the Tribunal finds the rate excessive, it is disproportional to the sums involved to recalculate.

25. Mr [NAME] made his determination on an open market value of the property of £950,000, arrived at by analysing a schedule of five comparable properties, the most recent being three sales in 2023, ranging in price from £900,000 to £1,425,000. Applying standard methodology to assess the modern ground rent and then capitalising such sum and deferring by the unexpired term, Mr [NAME] arrives at a figure of nil for the first reversion and, accordingly, nil for the second reversion.

26. The Tribunal agrees.

27. Mr [NAME] has valued the property both under section 9(1) of the Act and section 9(1A) of the act and arrives at an identical figure of £10.00 for both.

28. The Tribunal accepts Mr [NAME] valuation of £10.00 pursuant to the Leasehold Reform Act 1967.

The Tribunal’s Decision

29. The Tribunal determines that the price payable for the freehold interest in respect of the property known as [ADDRESS], [POSTCODE], including the enlarged garden, under the Leasehold Reform Act 1967 is £10.00 (Ten Pounds) and, that such sum is the appropriate amount to be paid into Court. For the avoidance of doubt, such sum excludes the land known as the Meadow.

RIGHTS OF APPEAL

1. A person wishing to appeal this decision to the Upper Tribunal (Lands Chamber) must seek permission to do so by making written application by email to [EMAIL] to the First-tier Tribunal at the [NAME] office which has been dealing with the case.

2. The application must arrive at the Tribunal within 28 days after the Tribunal sends to the person making the application written reasons for the decision.

3. If the person wishing to appeal does not comply with the 28 day time limit, the person shall include with the application for permission to appeal a request for an extension of time and the reason for not complying with the 28 day time limit; the Tribunal will then decide whether to extend time or not to allow the application for permission to appeal to proceed.

4. The application for permission to appeal must identify the decision of the Tribunal to which it relates, state the grounds of appeal, and state the result the party making the application is seeking.