First-tier Tribunal Sets Freehold Price for Property in London

OUTCOME: Allowed

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case reference : LON/OCE/2024/0098

Property : [ADDRESS] [POSTCODE]

Applicant Tenants : [APPELLANT] Claimant 1

[APPELLANT] Claimant 2

[COUNSEL] 3

[NAME] Claimant 4

Representative : [COUNSEL] [COMPANY]

Respondent Landlord : [COUNSEL] [NAME] (Missing Landlord)

Representative : In Person

Type of [NAME] : Section 26 and 27 of the Leasehold Reform, Housing and Urban Development Act 1993 (as amended) (“the Act”) for a determination of the valuation of the freehold.

Tribunal member(s) : Mr. R Waterhouse FRICS

Date of determination : 21 August 2024

Decision Determination based on Written Representations

© CROWN COPYRIGHT 

Decision of the Tribunal

1. The Tribunal determines that the price for the freehold of the property known as 57 [ADDRESS] [POSTCODE], pursuant to Schedule 6 of the Leasehold Reform, Housing and Urban Development Act 1993 (“the 1993 Act”), is £99450.00. This is before adjustment for court costs (see below).

2.The Tribunal approves the draft transfer on pages 148-153 of the hearing bundle.

Reasons

A. The matter relates to an [NAME] made under sections 26 and 27 of the Leasehold Reform, Housing and Urban Development Act (as amended) (“the Act”) for a determination of the price payable for the freehold pf the property known as 57 [ADDRESS] [POSTCODE] (“the property”). B. By proceedings brought under CPR Part 8 and issued on 22 September 2023 (“the valuation date”), the Applicants applied for a vesting Order. By an Order made by Deputy District Judge Boon, sitting at the County Court at Edmonton dated 23 February 2024, the matter was transferred to the Tribunal for the terms of acquisition to be determined. C. [ADDRESS] included the following:

2.By virtue of Section 26(1) of the Act and this Order, the Defendant's freehold interest in the Premises shall vest in the Claimants on such terms as may be determined by the First Tier Tribunal (Property Chamber) (“the tribunal”) to be appropriate with a view to the interest being vested in the Claimants in like manner (so far as the circumstances permit) as if the Claimants , had at the date of [NAME] this claim, given notice under section 13 of the Act of their claim to exercise the right to collective enfranchisement in relation to the Premises.

3.The matter be transferred to the Tribunal for the purpose of determining the terms of acquisition and approving the form of conveyance.

4.Following the Tribunals determination, the Claimants shall pay into Court the appropriate sum as defined by section 27 (5) of the act and determined by the Tribunal and shall do so in accordance with the provisions of CPR PD 56, paragraph 14.5.

3.The Tribunal issued Directions on 27 June 2024. The

Applicants were given an opportunity to request a remote hearing but have not done so and the matter has therefore come before me for determination based on written representations, in accordance with rule 31 of the Tribunal Procedure (First –tier Tribunal) (Property Chamber) Rules 2013 (“the rules”). I did not consider that an inspection was necessary or proportionate in this case.

Expert Evidence

4.An expert's valuation report dated 24 April 2023 was provided by Mr [NAME] of Bradstowe Chartered Surveyors. He has considerable experience of leasehold enfranchisement valuation, with 35 years' experience in appraisal of residential property in the Southeast area. His report does not contain the specific wording required by rule 19(5)(b) of the Tribunal Rules “I believe that the facts stated in this report are true and that the opinions expressed are correct”. But the declarations given are substantially to the same effect. I am satisfied that Mr. [NAME] is suitably qualified to give expert evidence and understands his duties to the tribunal.

5.The substantive valuation sections of the report may be summarised as follows. Mr. [NAME] did not inspect the property but undertook a desktop valuation.

6.The property comprises a small Victorian corner terraced house, converted into two flats with a frontage to [ADDRESS] and return frontage to [ADDRESS]. The property is arranged as two self-contained flats. 57a is accessed from the [ADDRESS] frontage and 57b is accessed from the [ADDRESS] frontage.

7.Flat 57a, has two bedrooms extending to approximately 85 m2 and 57b, likewise two bedrooms to approximately 70m2, both have allocated areas of the garden.

8.Both leases are identical in respect of term and ground rents. 99 years from 25 March 1986 with an initial ground rent of £75 per annum, for the first 33 years, then £125 per annum, for the second 33 years, and £175 per annum thereafter.

9.The valuation date in the report (p2 of the bundle) is date of claim issue which is 22 September 2023.Mr. [NAME] adopted a Term and reversion yield in line with [NAME] of 5 and 6%. The flat values were increased by 1% to reflect their freehold equivalent. A relativity figure of 86.18% to reflect the length of the leases.

10.As to extended lease value Mr. [NAME] referred to comparables drawn from within a quarter of a mile of the subject premises, of broadly similar areas and long leases. From these he derives a value for 57a of £550,000 and 57b of £475,000. An addition of 1% to reflect for both a new lease.

Findings

11. I agree with the deferment rate. I agree with the 1% virtual freehold/ extended lease adjustment, although this is a theoretical concept as flats are not sold on a freehold basis. I agree that there is no development value. I do not accept that any addition is required for appurtenant land.

12. I agree with the capitalisation rate under [NAME] and the capitalisation rate for the ground rent which is modest in nature.

13. I am comfortable that the comparables are relevant and their analysis is sound.

14. I confirm the valuation of £99,450.00, and I approve the form of draft transfer as set out at pages 148 to 153 in the bundle,

Name : [NAME] [NAME]: 21 August 2024 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. 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).