First-tier Tribunal Sets Premium and Costs for Lease Extension

OUTCOME: Allowed

© CROWN COPYRIGHT 2019

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference : CAM/22UN/OCR/2018/0173 Property : 9 [NAME], Dovercourt, Harwich, Essex [POSTCODE] Applicant : [redacted] : [NAME] [NAME] – [COMPANY] – Solicitors; [NAME] [RESPONDENT] – [RESPONDENT] Respondent : [redacted] : [NAME] [COUNSEL] - Director Type of Application : S91 Leasehold Reform, Housing and Urban Development Act 1993 (the Act) – determination of terms of acquisition in dispute - s48 and determination of costs – s60 Tribunal Members : Judge John Hewitt Mrs E Flint DMS, FRICS, [NAME] and venue of Hearing : 5 February 2019 Lifehouse Spa & Hotel Thorpe-le-Soken [POSTCODE] Date of Decision : 12 February 2019

DECISION

2 The issues before the tribunal and the decisions of the tribunal 1. The issues before the tribunal were:

1.1 The amount of the premium payable by the applicant to the

respondent on the grant of the new lease – s48 of the Act; and

1.2 The amount of costs payable by the applicant to the respondent

pursuant to s60 of the Act.

2. The decisions of the tribunal are that:

2.1 The amount of the premium payable by the applicant to the

respondent on the grant of the new lease is £6,550.00 (see

paragraph 35 below); and

2.2 The amount of costs payable by the applicant to the respondent

is £1,050 made up as to:

Valuation costs (s60(1)(b) £550.00

Legal costs (s60 (1)(a) and (c) £500.00

3. The reasons for our decisions are set out below.

NB Later reference in this Decision to a number in square brackets ([ ]) is a reference to the page number of the hearing file provided to us for use at the hearing.

Title and procedural background 4. On 2 July 2003 the respondent was registered at HM Land Registry as

proprietor of title number EX504524 being the freehold title of a parcel

of land at Vicarage Farm, [NAME] [1]. The Schedule of notices of

leases in the Charges Register records the registration of leases flats

(most with parking spaces) including that of 9 [NAME] which is

registered with title number EX437713.

5. On 12 May 2014 the applicant was registered at HM Land Registry as

proprietor of the lease of 9 [NAME] and a parking space. The lease

is dated 18 January 1991 and granted a term of 99 years from 1 January

1991.

6. For the purposes of these proceedings the applicant is a qualifying

tenant and the respondent is the reversioner.

7. The applicant gave to the respondent a notice of claim pursuant to s42

of the Act. It is dated 21st February 2018 [55]. The notice proposed a

premium of £5,000 for the grant of the new lease.

8. The respondent gave to the applicant a counter-notice pursuant to s45

of the Act. It is dated 6 April 2018 [59]. The respondent admitted that

on the relevant date the applicant had the right to acquire a new lease.

3

The respondent rejected the premium proposed and counter-proposed

a premium of £9,150.

9. Despite negotiations the parties were unable to agree all of the terms of

acquisition and on 1 October 2018 the tribunal received from the

applicant’s solicitors an application pursuant to s48 of the Act [43].

It was apparent that the matters in issue were the premium and costs.

As to premium, the application form recorded the rival positions as

follows:

Applicant £6,250

Respondent £7,850

Directions were given on 10 October 2018 [61].

10. An inspection of the property and the development of which it is part

was scheduled for 10:00 Tuesday 5 February 2019 and the hearing to

commence as soon thereafter as was convenient to the parties, their

representatives and the members of the tribunal.

Inspection 11. The respondent’s representative, [NAME] [COUNSEL], did not attend the

inspection of the property although he had been invited to do so.

The applicant showed the members of the tribunal around the

property. Before and after the inspection the members of the tribunal

were able to carry out an external inspection of the block, its car

parking spaces, the modest communal gardens and the immediate

locality generally including a nearby sports stadium. The members

were not accompanied when they did so.

12. The development is located in a low lying area about 1 mile from the

Dovercourt town centre.

13. The subject property is a one-bedroom flat on the first floor of a

purpose-built self-contained three-storey block of 9 similar one-

bedroom flats constructed in 1990. The construction is of cavity

brick/load bearing timber framed walls beneath a pitched and

concrete tile clad roof draining to PVC rainwater goods, and with solid

floors.

The communal entrance at ground floor has a door entry system. A

hallway leads to the ground floor flats and a stairway leads to the flats

on the first and second floors. There is no lift. A helpful photograph of

the block is at [27].

The flats enjoy the benefit of mains water, drainage and electricity

amenities but there is no gas connection.

4

The property has the benefit of replacement uPVC double-glazed

windows. It is heated by mounted electric night storage heaters.

It was not in dispute that the accommodation comprises:

Entrance hall with a storage cupboard and a further cupboard housing

hot and cold water tanks.

Reception room 3.13m x 5.02m

Kitchen

1.81m x 3.20m

Bathroom/wc 2.32m x 1.67m

Bedroom

3.30m x 3.23m

The total GIA was estimated to be 42.4m² (457 ft²).

Hearing

14. The applicant was represented by his solicitor, [NAME] [COUNSEL]. [NAME] [COUNSEL]

wished to call a [NAME], [NAME] [NAME] of [NAME] to give

expert valuation evidence. [NAME] [NAME] report/valuation dated 9

January 2018 is at [40]. That report is not compliant with the

provisions of rule 19.

However, [NAME] [NAME] confirmed to us that he fully understood his

duty as an expert witness was to help the tribunal and that overrode

any obligation he may have to the applicant, and that he fully

understood the obligations imposed upon him by the RICS of which he

is a Fellow.

In the absence of any objections to [NAME] [NAME] giving oral evidence

and speaking to his report, the tribunal permitted him to do so.

15. The respondent was represented by [NAME] [RESPONDENT], a director. [NAME] [RESPONDENT]

did not propose to call his [NAME], [NAME] [NAME] of

[NAME] to give expert valuation evidence. This was because the

respondent did not wish to incur the cost of doing so and did not

consider it necessary to do so. [NAME] [NAME] wished to rely upon [NAME]

[NAME] report/valuation dated 19 March 2018 [26], save that he did

not agree with [NAME] [NAME] opinion of a long lease value of £85,000

and instead submitted a long lease value of £95,000. In support of that

[NAME] [NAME] wished to rely upon his ‘Statement of Fact’ at [35]. Upon the

tribunal seeking clarification of his position, [NAME] [NAME] was clear that he

wanted to rely upon [NAME] [NAME] report, he did not disavow it; it was

just wrong in one particular, he said.

The valuation evidence 16. The parties were agreed that:

16.1 The valuation date was 21 February 2018;

16.2 There were no tenant’s improvements to take into account;

16.3 The unexpired term was 70.86 years (in his report [NAME]

[NAME] had cited 71 years unexpired but at the hearing he

5

agreed that 70.86 years was more accurate and the figure to

adopt);

16.4 The current ground rent was £60 pa rising to £120 pa as from

01.01.2023 and rising to £240 pa as from 01.01.2056;

16.5 The yields were 6% on the ground rent and 5% on the reversion;

thus

16.5 The loss or diminution in value of the freehold value was £4,588.

The lease values 17. [NAME] [NAME] had originally adopted a long lease value of £80,000

but later revised that to £85,000 evidently adopting that figure arrived

at by [NAME] [NAME].

18. [NAME] [NAME] then applied the [NAME] graph of relativity of

93% to arrive at a short lease value of £79,050.

19. [NAME] [NAME] considered this fitted well with the sale of 19 [NAME] at £76,000 in March 2017. In oral evidence [NAME] [NAME]

accepted that he had not made a conscious adjustment for time. He

accepted that the market had improved between March 2017 and

February 2018, by perhaps as much as 7.5%. However, when it was put

to him that a 7.5% increase amounted to £5,700 and that would

provide a time adjusted value of £81,700, [NAME] [NAME] said that

might not be right and that he preferred a long lease value of £85,000

and a relativity of 93% to arrive at a short lease value of £79,050.

The attention of [NAME] [NAME] was drawn to two comparables relied

upon by [NAME] [NAME]:

1 [NAME] 2017 £65,000

7 [NAME] 2017 £65,000

And how these might square with the sale of 19 [NAME] for

£76,000 just three weeks later.

[NAME] [NAME] accepted that these transactions cannot be ignored, but

there might be special circumstances, including perhaps a forced sale,

or at a sale below value such that little weight should be attached to

them. The applicant observed that one of those sales may have been a

probate sale.

20. [NAME] [NAME] said that he relied upon the [NAME] graph

because it was a graph he had always used and that it had served him

well for many years in arriving at settlements. [NAME] [NAME] said that

he had not considered whether the underlying data on which the graph

was based might now be a little outdated.

21. [NAME] [NAME] did not wish to make any observations on the Savills

2015 graphs mentioned by [NAME] [NAME] to arrive at a relativities of

84.94% and 87.74%.

6

22. From his report, it is clear that [NAME] [NAME] relied upon the sales of 1,7

and 19 [NAME] mentioned above and also on the proposed sale of

11 [NAME] which he noted was under offer (at the time of his

report – 19 March 2018) at £75,000. [NAME] [NAME] also noted that this

sale was subject to and with the benefit of an assured shorthold tenancy

which might impact on value.

[NAME] [NAME] further says he relied upon information from [NAME] who evidently told him that the market was saturated with one-

bedroom flats, but there were few sales of long leases to draw on to

arrive at a comparable value, but that in their experience the market

value of the subject flat with a long lease would lie in the range £85,000

- £90,000.

[NAME] [NAME] made reference to the ‘recent’ Sloane Stanley Estate v

Mundy decision and to the Savills 2015 graphs - 84.94%

(unenfranchisable) and 87.74% (enfranchisable) which considered lent

support to the [NAME]’ views of long lease values.

In the light of the above and applying his experience and expertise, [NAME]

[NAME] was of the opinion that it was appropriate to adopt a long lease

value of £85,000. As noted above, that was a value which [NAME]

[NAME] adopted.

23. [NAME] [NAME] did not agree with those opinions. [NAME] [NAME] contended for a

higher value. At one time he suggested a figure above £100,000, but

eventually he settled for £95,000.

24. [NAME] [NAME] wished to rely upon a document which he termed ‘Statement

of Fact’ prepared by him and dated 12.11.2018 [35]. The document

makes a number of criticisms of [NAME] [NAME] report. He noted that

11 Langley had been under offer for a period at £80,000 and then

£75,000 but had not sold because it was overpriced and unmarketable.

At the hearing [NAME] [NAME] told us that so far as he was aware 11 [NAME] has still not sold – at least he has not been given a notice of

assignment.

[NAME] [NAME] also said that he was aware from Rightmove that a ground

floor one-bedroom flat was being marketed for sale with a long lease at

an asking price in excess of £100,000. [NAME] [NAME] was not able to

provide any details of the property on offer.

[NAME] [NAME] was not able to explain to us why he had not requested [NAME]

[NAME] to comment on this further evidence [NAME] [NAME] had unearthed

or to provide an amended valuation taking into account such further

data as he - [NAME] [NAME] – considered appropriate. We infer that [NAME]

[NAME] was not willing to incur the costs and was convinced that his own

analysis was self-evident.

7

Finally and for the sake of completeness we record that [NAME] [NAME] was

not able to tell us why [NAME] [NAME] had placed some reliance on the

Savills 2015 graphs.

Discussion 25. There were shortcomings in the valuation evidence of both parties. It

was not helpful that [NAME] [NAME] was not asked to attend to speak to his

report. It was also unhelpful that [NAME] [NAME] had not instructed [NAME]

[NAME] to update his valuation in the light of the further evidence which

[NAME] [NAME] said he had unearthed and which he believed had a

significant effect or impact on the premium ultimately payable by the

applicant.

26. Doing the best we can with the materials presented to us by the parties

we find that the starting point is a long lease value of £85,000. This was

a value that both [NAME] had agreed upon as being the right value as at

February 2018 – the valuation date. It was a value that [NAME] [NAME] had

tested in more than one way and he says it was supported by

information from [NAME]. In the absence of any compelling

evidence to the contrary, we find it is a value we can rely upon with

some confidence.

27. We find that we are not able to place any weight on the further

materials relied upon by [NAME] [NAME] in his ‘Statement of Fact’ dated

November 2018 [35]. [NAME] [NAME] does not identify the ground floor flat

he relies upon. He gives no information about it at all. Also it is a

property on the market with an asking price. There is no suggestion

that it led to a concluded transaction, or even went under offer. We

find that whatever the circumstances are of the property on the market

in November 2018 that [NAME] [NAME] refers to, it does not provide us with

any assistance as to the long lease value of the subject property in

February 2018.

28. The evidence in this case well illustrates the need to be wary of the

weight that might be given to properties ‘under offer’. [NAME] [NAME] relied

upon 11 [NAME] under offer in March 2018, when he wrote his

report, but which remains unsold in February 2019.

29. In the absence of compelling evidence to the contrary we prefer to rely

upon the agreed professional opinions of both [NAME].

30. As to the short lease value, we find that we cannot place much weight

on the fact that 11 [NAME] was allegedly under offer at £75,000 in

March 2018. If it was, it did not lead to a concluded transaction. We

accept [NAME] [NAME] evidence that it was on the market for a good while,

and, so far as he is aware has still not sold because he has not been

served with a notice of assignment. Moreover, as [NAME] [NAME] pointed

out, the fact it was on the market subject to and with the benefit of an

assured shorthold tenancy might have had an impact on its value, such

that it was not a ‘vacant possession on completion value’.

8 31. We find that the most helpful comparable is 19 [NAME]; followed

by 1 and 7 [NAME]. We have to bear in mind that 1 [NAME]

was probably a probate sale and some adjustment might be

appropriate. We also bear in mind that neither party adduced any

evidence as to the condition of these flats. We cannot speculate but we

note these flats are now nearly 30 years old and the interiors might well

be somewhat dated.

We conclude from these comparables that allowing for appropriate

adjustments the average short lease value in February/March 2017 was

£72,000. Making an adjustment for time to February 2018 using HM

Land Registry data we arrive at a short lease value of £76,500 at the

valuation date.

32. We have tested this value by reference to relativity. Leasehold relativity

may be defined as the value of the current lease divided by the long

lease value of the same flat with vacant possession. This is expressed as

a percentage of the long lease value. Part of the process requires a

valuation of the current lease as if it has no rights under the Act.

Over the years some [NAME] have compiled graphs of relativity and

these have been refined and developed as an aid to assess relativities.

The graphs are based on a range of data and there is some controversy

amongst [NAME] as to the accuracy and value of them. As they are

ultimately an expression of the [NAME]’s opinion, their utility has often

been criticised. To try to assist [NAME] the RICS established a working

group chaired by [COUNSEL] QC to carry out research into the

range of graphs. In October 2009 the RICS issued a report: Leasehold

Reform: Graphs of Relativity. The authors of the report were not able

to agree upon definitive graphs that might used throughout the

profession. Instead, the report drew together various graphs of

relativity that are in existence together with details of the data that lies

behind each one. The hope was that they might provide useful guidance

to practitioners considering them.

33. The Upper Tribunal ([NAME]) (and its predecessor) has

concluded that the graphs can be used - ‘doing one’s best’ - along with

any market evidence a [NAME] may have – [COMPANY] v [NAME]

[2009] RVR 95; [2009] 2 EGLR 151. The controversy about the graphs

and their reliability to show relativity continues. As Lewison LJ put it in

The Trustees of the Sloane Stanley Estate v Mundy [2018] EWCA Civ

35 – at para 13 “The holy grail would be a method of determining

relativity which is both reliable and simple to apply.”

34. [NAME] [NAME] cited the Upper Tribunal decision in Sloane Stanley v

Mundy as support for adopting the Savills 2015 graphs to cross-check

his values. Why he chose to do so it not clear to us. That case concerned

properties in prime Central London (PCL) and the Savills graphs are

based solely on data concerning properties in PCL. With no disrespect

to Dovercourt, in our judgment there is a wide difference in the market

in PCL and in Dovercourt. Moreover, some [NAME] hold the strong view

9

that the PCL market is not mortgage dependent and this has a material

effect.

35. In contrast [NAME] [NAME] relies on just one graph – [NAME].

This graph was prepared in 2009 and is based on opinions arising from

transactions which took place in Greater London. He says it provides a

relativity of about 93%, although more accurately the figure is 93.14%

Following questions from the members of the tribunal [NAME] [NAME]

adopted this graph because it has served him well for many years. He

did not consider it to be dated and he did not consider it would be

helpful to consider a range of appropriate graphs and perhaps strike an

average.

36. In our judgment, given the general controversy over the benefit and

accuracy of the range of graphs in existence, the better practice is to

look at several and take a broad view. Our short lease value of

£76,500 is 90% of the [NAME]’ agreed long lease value of £85,000.

Having regard to a number of graphs available to us we find that

relativity of 90% sits well within the range of the data. We are therefore

reinforced in our view that the short lease value of £76,500 is in the

right region.

Valuation of the premium 37. Having made the findings above we determine the premium payable is

arrived at as follows:

Diminution in freehold (agreed)

£4,588 Marriage value:

Long lease value £85,000

Less: Freehold value £ 4,588

Short lease value £76,500 £3,912

50% = £1,956

£6,544 Premium, say

£6,550

Costs 38. The valuation costs of £550 were not in dispute.

39. [NAME] [RESPONDENT] told us that the respondent was registered for VAT and was

so was able to set off input tax against output tax. Thus to achieve an

indemnity of the net cost the applicant was not required to pay over the

VAT of £110 on the [NAME]’s invoice.

40. The counter-notice [60] had been given by the respondent’s then

solicitors. Evidently the solicitor dealing with the matter retired and the

firm did not have a fee-earner experienced in enfranchisement work.

10

So, [NAME] [NAME] and his daughter-in-law visited the solicitors discussed

the issues, took the file and decided to deal with the matter in-house.

41. In respect of the matters set out in s60(1) (a) and (c) [NAME] [NAME] claimed

10 hours at £70 per hour = £700. [NAME] [NAME] produced a schedule which,

in broad terms showed how the 10 hours had been arrived at. No claim

was made as to any costs which may have been incurred in connection

with the solicitors serving the counter-notice

42. [NAME] [NAME] submitted that the costs mentioned in s60 concerned

professional costs only and did not apply to services rendered by a

director who was not professionally qualified. [NAME] [NAME] told us that as a

director he was paid £6,000 pa for his services but there was no fixed

arrangement as to what those services comprised or how much time

was spent on them. It was a case of he did what needed to be done. The

respondent is a [COMPANY].

42. [NAME] [RESPONDENT] said that he arrived at £70 as being a fair rate having made

enquiries via [NAME]. [NAME] [NAME] said that if costs were payable he did

not object to the rate of £70 which he equated as the charge-out rate

applicable to a trainee solicitor.

44. Rival submissions were put to us as to the reasonableness of the time

claimed for. The parties were not agreed as to the number of email that

passed before the terms of the new lease were agreed. [NAME] also

submitted that there was duplication in both [NAME] [NAME] and his

daughter-in-law visiting the solicitors.

45. We were satisfied that on the true construction of s60 the costs payable

by the tenant were not limited to external professional costs incurred

by the landlord. If a landlord had an in-house lawyer handling the

matter costs were recoverable at a rate close to what an external lawyer

might have charged. Where the work was carried by someone not

professionally qualified a reasonable rate was recoverable. Here that

rate was agreed at £70. That rate is much less than would have been

payable by the applicant if the respondent had instructed solicitors.

46. [NAME] [COUNSEL] had argued that if a solicitor had carried out the work in

question, the time claimed for would have been less. We find that is

right but the rate claimed for would have been much higher than £70.

47. We can but take a broad view on the rival submissions before us. In

doing so we find that a reasonable sum for the applicant to pay in

respect of costs under s60(1)(a) and (c) of the Act is £500.

48. The question of VAT does not arise in respect of the services rendered

by [NAME] to his company which is an in-house arrangement.

Judge Joh Hewitt 12 February 2019

11

Statutory Provisions

Leasehold Reform, Housing and Urban Development Act 1993

60.— Costs incurred in connection with new lease to be paid by tenant.

(1) Where a notice is given under section 42, then (subject to the provisions of this section) the tenant by whom it is given shall be liable, to the extent that they have been incurred by any relevant person in pursuance of the notice, for the reasonable costs of and incidental to any of the following matters, namely—

(a) any investigation reasonably undertaken of the tenant's right to a new

lease;

(b) any valuation of the tenant's flat obtained for the purpose of fixing the

premium or any other amount payable by virtue of Schedule 13 in connection

with the grant of a new lease under section 56;

(c) the grant of a new lease under that section;

but this subsection shall not apply to any costs if on a sale made voluntarily a stipulation that they were to be borne by the purchaser would be void.

(2) For the purposes of subsection (1) any costs incurred by a relevant person in respect of professional services rendered by any person shall only be regarded as reasonable if and to the extent that costs in respect of such services might reasonably be expected to have been incurred by him if the circumstances had been such that he was personally liable for all such costs.

(3) Where by virtue of any provision of this Chapter the tenant's notice ceases to have effect, or is deemed to have been withdrawn, at any time, then (subject to subsection (4)) the tenant's liability under this section for costs incurred by any person shall be a liability for costs incurred by him down to that time.

(4) A tenant shall not be liable for any costs under this section if the tenant's notice ceases to have effect by virtue of section 47(1) or 55(2).

(5) A tenant shall not be liable under this section for any costs which a party to any proceedings under this Chapter before [the appropriate tribunal]1 incurs in connection with the proceedings.

(6) In this section “relevant person” , in relation to a claim by a tenant under this Chapter, means the landlord for the purposes of this Chapter, any other landlord (as defined by section 40(4)) or any third party to the tenant's lease.

ANNEX - RIGHTS OF APPEAL

12 1. If a party wishes to appeal this decision to the Upper Tribunal ([NAME]) 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.

2. 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.

3. 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.

4. 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.

© CROWN COPYRIGHT 2019

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case Reference : CAM/22UN/OCR/2018/0173 Property : 9 [NAME], Dovercourt, Harwich Essex [POSTCODE] Applicant : [redacted] : [APPELLANT] Solicitors Respondent : [redacted] : [NAME] [COUNSEL] - Director Type of Application : Application by Respondent for Permission to Appeal the Decision dated 12 February 2019 Tribunal Members : Judge John Hewitt Mrs E Flint [NAME] of Application : 5 March 2019 Date of Decision : 21 March 2019

DECISION

2 Decisions of the tribunal 1. The tribunal has considered the respondent’s application for permission to appeal and determines that:

1.1 it will not review its decision; and 1.2 permission to appeal be refused.

Notes 2. In accordance with section 11 Tribunals, Courts and Enforcement Act 2007 and rule 21 of the Tribunal Procedure (Upper Tribunal) ([NAME]) Rules 2010, the respondent may make a further application for permission to appeal to the Upper Tribunal ([NAME]).

3. Such an application must be made in writing and received by the Upper Tribunal ([NAME]) no later than 14 days after the date on which the First-tier Tribunal sent notice of this refusal to the party applying for permission to appeal.

4. The Upper Tribunal ([NAME]) may be contacted at:

5th [ADDRESS] [POSTCODE]

Tel:

[PHONE]

Email: [EMAIL]

Background 5. The substantive decision was sent to the parties on 12 February 2019.

6. On 5 March 2019 the tribunal received from the respondent an application for permission to appeal the substantive decision. On 7 March 2019 the tribunal received a follow-up letter dated 5 March 2019 from the respondent purporting to provide further evidence upon which the respondent wished to rely in his appeal.

7. Rule 52(2) of this tribunal’s rules provides that an application for permission to appeal must be received within 28 days of the date on which the substantive decision was sent to the party seeking permission to appeal.

8. We are satisfied that the application presently before us was received within the time limit provided for.

The approach to applications for permission to appeal 9. Rule 53 requires that on receiving an application for permission to appeal the tribunal must first consider, taking into account the overriding objective in rule 3, whether to review its decision in accordance with rule 55.

3 10. Rule 55 requires that a tribunal may only undertake a review of its decision:

10.1 Pursuant to rule 53, on receipt if an application for permission to appeal; and

10.2 If it is satisfied that a ground of appeal is likely to succeed.

11. In broad terms, permission to appeal is given where something may have gone wrong with the original decision or hearing. For example, the law was wrongly interpreted or applied, a valuation principle was misinterpreted or disregarded, there was a substantial procedural irregularity and/or the point at issue is of potentially wide implication.

12. Permission will be refused if the proposed appeal has no realistic prospect of success and there is no other good reason for an appeal.

Reasons for the decision 13. The original tribunal’s decision was based on the evidence before it and the respondent has raised no legal arguments in support of the application for permission to appeal.

With the letter dated 5 March 2019 the respondent has attached a screen shot of a text evidently sent by a [NAME] to [NAME] [NAME]. It is very questionable as to whether such a screen shot is evidence at all or that it can be relied upon with confidence. No explanation was given as to why that evidence was not available at the hearing and why [NAME] [NAME] did not attend the hearing to give that evidence in person.

In these circumstances we find that we cannot give much weight to the screen shot of the text.

14. [NAME] [NAME] has repeated arguments he raised at the hearing. He has mentioned a new point which he could have raised at the hearing but which he did not raise. He has not explained why he did not do so. Some further comments on this are set out in the Observations section below.

Observations 15. For the benefit of the parties and of the Upper Tribunal ([NAME]) (in the event that a further application for permission to appeal is made), the tribunal has set out below some comments and observations on some of the specific points raised by the respondent in the application for permission to appeal.

The long lease value 16. [NAME] [NAME] objects to the tribunal’s finding of £85,000. We repeat this was the value selected by the respondent’s [NAME] and with which the applicant’s [NAME] agreed, both in his report dated 9 January 2018 and

4 in his oral evidence at the hearing when he was cross-examined by [NAME] [NAME] about it.

17. Valuation is an art not a science. Usually there is a bracket or range of values that might be appropriate. The skill of the [NAME] is where to place a property within that bracket. [NAME] [NAME] [NAME] put the bracket at “ … an improved lease would lie in the range £85,000 to £90,000.” In the event the [NAME] adopted £85,000. Of course [NAME] [NAME] [NAME] might have adopted a higher value within his bracket but he chose not to do so. 18. [NAME] [NAME] did not request his [NAME] to submit a supplemental report dealing with the long lease value and he did not call his [NAME] to give oral evidence at the hearing to support a value greater than £85,000.

19. In these circumstances it was not wrong or contrary to valuation principle for the tribunal to adopt the value of £85,000. The tribunal did not misinterpret the evidence before it.

20. The screen shot of [NAME]’s text simply says: “ I would hope to achieve £87k is with a long lease.” [sic] So far as we are aware, [NAME] [NAME] is not an expert or a property professional. The screen shot is not evidence of the long lease value at the valuation date of 21 February 2018. But, as an aside, if [NAME] [NAME] hopes to achieve £87,000 in March 2019, that suggests that a value of £85,000 in February 2018 is not far from the mark. Short lease values and adjustments for time 21. [NAME] [NAME] suggests that the tribunal should have taken the average of the three comparables. We did not do so because it was not appropriate to do so. The comparables were not of equal weight. There were factors which had to be put in the mix. 22. [NAME] [NAME] [NAME] did not make any adjustments for time. [NAME] [NAME] has attached to his application for permission to appeal HM Land Registry data for Flats and Maisonettes in Essex – February 2017 – February 2018. This was not put in evidence by [NAME] [NAME] at the hearing. He has not explained why not.

23. In any event it was not the data the tribunal had regard to. The tribunal had before it data from HM Land Registry for Flats and Maisonettes March 2017 – February 2018 for five locations:

UK; Tendring: Suffolk: Essex: Suffolk Coastal

The most relevant and the one which carries more weight is Tendring which is the local authority area in which the subject flat is situate. But, the data cannot be applied mechanically and strictly arithmetically.

Tendring covers a large area and within it there will be flats of a wide variety of locations, sizes and values. Not all flats and maisonettes

5 within Tendring increased in value to the exact same extent over the period.

The data is one of several valuation tools to have some regard to, but it has to be applied with some thought to the subject flat. On this point we bear in mind that in [NAME] [NAME] [NAME]’s report he says: “[NAME] advise that the market has been saturated with 1 bedroom flats which has impacted on values …”.

24. The tribunal remains satisfied that its short lease value of £76,500 was arrived at in accordance with the evidence and data before it and the application of good valuation practice. No error or misinterpretation of the materials before the tribunal occurred. The graphs 25. In paragraph of 36 of our decision we made it clear that we took a broad view of a number of graphs. [NAME] [NAME] [NAME] had relied upon a PCL graph which the tribunal rejected as being wholly inappropriate.

The applicant’s [NAME] relied upon one graph – [NAME]. Whilst that is a relevant graph, the graphs are generally the subject of widespread criticism. The tribunal was and is of the view that the better practice is to look at a number of relevant graphs and draw on experience when arriving at a relativity.

26. In the subject case the tribunal had arrived at its long lease and short lease values first and then had regard to several relevant graphs before concluding that those values sat well within the range of the different relativities revealed by the graphs.

27. The tribunal remains of the view that this approach accords with good valuation practice and that no error or misdirection occurred.

Judge John Hewitt 21 March 2019