First-tier Tribunal Sets Freehold Premium Under 1993 Act

OUTCOME: Allowed

1

Case Reference

: LON/00AQ/OCE/2020/0126

HMCTS Code : P:PAPERREMOTE

Property : 10 [ADDRESS], [POSTCODE]

Applicant

: [redacted] : [RESPONDENT]

Respondent: [redacted] : Leasehold Reform, Housing & Urban Development Act 1993 –

Section 26

Date of Application To County Court : 1 June 2019

Tribunal Member : [NAME] of Decision : 3 March 2021 _________________________________________________

DECISION _____________________________________

© CROWN COPYRIGHT 2021

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

2 1. The Tribunal determines that the premium to be paid for the freehold interest of the property known as 10 [ADDRESS], [POSTCODE] (“the Property”) under the terms of the Leasehold Reform, Housing and Urban Development Act 1993 is £87,966 to the Landlord excluding costs.

2. The Tribunal amends the form of the transfer document TRI for Title Number MX240217 to include an additional provision.

Reasons for Decision

Introduction

3. This application concerns a collective enfranchisement claim for the Property, which comprises a semi-detached house and grounds. The house has been converted into two flats; both of which are let on long leases.

4. The respondent is the freeholder of the Property.

5. The leaseholders of Flats 10A and 10B wish to acquire the freehold interest in the Property. The person to be served with a Tenant's notice claiming the right to acquire the freehold cannot be found.

6. By the order (the ‘Order’) of District Judge Mauger in the County Court at Central London 14 March 2020 it was ordered that:

The Claimant, having taken reasonable steps to locate the Defendant freeholder and being unable to give initial notice to exercise its right to collective enfranchisement under Section 13 of the Leasehold Reform, Housing and Urban Development Act 1983 ("the Act) because of the Defendant's absence, the Court hereby orders:

1. The Requirement to serve an initial claim notice under section 213 of the Act is dispensed with. 2. The case is referred to the First-Tier Tribunal (property Chamber) for the premium and other terms of acquisition to be determined. 3. Order that the costs incurred due to the absence of the freeholder are to be deducted from the premium.

The Property

7. The property is a semi-detached two storey 1930s house which has been converted into two flats, one each of the ground and first floors. They are each held on a long lease.

8. The ground floor flat (10b) is accessed via the original front door and comprises hallway, reception, two bedrooms, a family bathroom and separate WC. The first floor flat (10a) is accessed via a doorway in the left hand flank elevation which leads to a small hallway and stairs to the

3 first floor. The flat comprises landing, two bedrooms, reception with kitchen off, family bathroom and separate WC.

9. To the front of the property is a driveway with space for two cars. To the rear a garden extends from the building which is split with each flat having a portion.

10. The property is of traditional solid brick construction below a timber framed pitched tiled roof with double height bay to the front elevation. There is a modern extension to the rear which is of cavity brick construction.

11. Internally the property has suspended timber floors and the walls are plastered and mainly finished in paint. There are areas of tiling in the kitchens and bathroom.

12. The windows are modern uPVC sealed double glazed units.

13. Both flats are held by 99 years leases from 29 September 1981 with an initial ground rent £35, rising to £70 after 33 years and £105 for the remainder of the term.

Applicant’s Submissions

14. Following the Court Order, the Tribunal is making a determination of the appropriate premium for the freehold interest under Title No MX240217 and the form of transfer document.

15. The Applicant provided a bundle to the Tribunal which included a valuation report prepared by Mr [NAME] of [COMPANY] dated 14 December 2020 with a valuation date of 18th June 2019, being the date of the application to the County Court.

Tribunal’s Deliberations

16. The Tribunal considered the valuation of the Property and the assumptions and calculations made by Mr [NAME].

17. The Tribunal noted an error with regard to the ground rent of both properties. This was not £70 per property per annum for the remainder of the term but would increase to £105 in 2047.The corrected valuation is shown at Appendix 1 and the premium payable is £87,966.

18. The Tribunal accepted the element of hope value for Flat 10a, as detailed in the valuation report.

19. TR1 Transfer Document

The Tribunal determines an additional provision, namely: 11.3 The Transferee hereby covenants with the transferor by

4 way of indemnity only to observe and perform the covenants contained in 1 A Conveyance of the freehold estate in the land in this title and other land dated 18 September 1924 made between (1) The [COMPANY] and (2) [NAME] 2 A Conveyance of the freehold estate in the land in this title and other land dated 12 December 1924 made between (l) [NAME] (Vendor) and (2) [NAME] (Purchaser) and to be liable for any future breach or non- observance thereof.

Right of Appeal

20. 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.

21. 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.

22. 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.

23. 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.

[NAME]

3 March 2021

5 Appendix 1 Valuations

Valuation of [ADDRESS], London

Freeholder's Present Interest

Term

Initial ground rent

£70

[NAME] 28.14 years @6%

13.425 £940

Increased ground rent

£105

[NAME] 33.14 years @6% 18.183

PV £1 in 28.14 years @6% 0.197 3.582051 £376

Reversion

Freehold VP £345,000

PV £1 in 61.28 years 5.5%

0.038 £13,110 £14425.75

Landlord's Loss

£14,425

Marriage Value

current interest lessee £273,000

current interest freehold £14,425

Total

£287,425

less

Future interest

£345,000

Marriage Value

£57,575 50%

£28,787.50

Summary

Loss of current value £14,425

share of marriage value £28,787.50

hope value for development £2,730 £45,943

6

Valuation of [ADDRESS], London

Freeholder's Present Interest

Term

Initial ground rent

£70

[NAME] 28.14 years @6%

13.425 £940

Increased ground rent

£105

[NAME] 33.14 years @6% 18.183

PV £1 in 28.14 years @6% 0.197 3.582051 £376

Reversion

Freehold VP £335,000

PV £1 in 61.28 years 5.5%

0.038 £12,730 £14045.75

Landlord's Loss

£14,045

Marriage Value

current interest lessee £265,000

current interest freehold £14,045

Total

£279,045

less

Future interest

£335,000

Marriage Value

£55,955 50%

£27,977.50

Summary

Loss of current value £14,045

share of marriage value £27,977.50

£42,023