First-tier Tribunal Sets Premium for Collective Enfranchisement

OUTCOME: Allowed

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FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : JM/LON/00AY/OCE/2020/0129 HMCTS Code (paper, video, audio) :

P: PAPERREMOTE

Property : 258 [ADDRESS] [POSTCODE] Applicant : [redacted] : [COUNSEL] Respondent : [redacted] : Not represented Type of [NAME] : Section 24 of the Leasehold Reform, Housing and Urban Development Act 1993 Tribunal members : Mr [NAME] [NAME] of determination and venue : 23 August 2022 at 10 [ADDRESS] [POSTCODE] Date of decision : 22 August 2022

DECISION

Covid-19 pandemic: description of hearing This has been a remote hearing on the papers which has been consented to by the parties. The form of remote hearing was P:PAPERREMOTE. A face-to-face hearing was not held because one was not requested and all the issues could be dealt with on paper. The documents that the Tribunal were referred to are in the applicants bundle of 197 pages.

2 Summary of the tribunal’s decision (1) The appropriate premium payable for the collective enfranchisement is £16,068. Background 1. This is an [NAME] made by the applicant nominee purchaser pursuant to section 24 of the Leasehold Reform, Housing and Urban Development Act 1993 (“the Act”) for a determination of the premium to be paid for the collective enfranchisement of 258 [ADDRESS] [POSTCODE] (the “property”).

2. By a notice of a claim dated 2 December 2019, served pursuant to section 13 of the Act, the applicant exercised the right for the acquisition of the freehold of the subject property and proposed to pay a premium of £10,000 for the freehold.

3. On 2 February 2020, the respondent freeholder served a counter-notice admitting the validity of the claim and counter-proposed a premium of £17,000 for the freehold.

4. On 29 July 2020, the applicant applied to the tribunal for a determination of the premium and terms of acquisition. The issues Matters agreed 5. There are no matters agreed.

Findings of fact 6. The tribunal finds the following matters: (a) The subject property is a converted late Victorian house arranged on 3 floors and converted to 3 flats; (b) The valuation date: 2 December 2019;

3 (c) Details of the tenants’ leasehold interests: Flat Lessee term Ground rent pa [NAME] 125 years from 25 March 2006 £ 100.00 First [NAME] 125 years from 25 March 2006 £ 250.00 [NAME] [NAME] 125 years from 25 March 2006 £ 250.00

(d) Ground rent: As shown in the table and payable throughout the term. The lease for the ground floor has a typed ground rent of £100 pa with some hand written comments which are not initialled and not therefore a term of the lease. The other two leases are £250 pa (e) Unexpired terms at valuation dates: 111.30 years; (f) Capitalisation of ground rent: 6% per annum; and (g) Deferment rate: 5%. (h) There is no development hope value;

The hearing 7. The case was decided on paper on 23 August 2022. The applicant was represented by Mr [APPELLANT] who submitted a detailed bundle and a valuation prepared by Mr [RESPONDENT]. The respondent was not represented and made no submissions.

8. Neither party asked the tribunal to inspect the property and the tribunal did not consider it necessary to carry out a physical inspection to make its determination.

4 Comparable evidence 9. The Following comparables were submitted by Mr [NAME]. Address description date price Flat 11, Block J, Peabody Estate, [ADDRESS]24 3rd fl 2 bed converted flat, 716 sq ft no garden 02/12/2019 £ 447,500 [ADDRESS]24 2 bed converted flat ground floor 688 sq ft 07/01/2019 £ 495,000 Flat B [ADDRESS]24 2 bed first floor converted flat 582 sq ft 09/09/2020 £ 430,500 [ADDRESS]24 2 bed first floor converted flat 618 sq ft 17/10/2019 £ 458,000 [ADDRESS]24 Ground Floor 2 bed converted flat Garden 655 sq ft 07/12/2018 £ 490,000

The tribunal has relied on its knowledge and experience and finds that the evidence is appropriate to the case. The tribunal accepts Mr [NAME] assessment of the extended lease values as follows Ground Floor 495,000 £ First Floor 450,000 £ 2nd floor 430,000 £ total 1,375,000 £

Capitalisation rate 10. Mr [NAME] has used a rate of 6% in his valuation but no reasons are given. However he is an experienced valuer and this rate is in line with other tribunal decisions and the tribunal accepts this is an appropriate rate. Deferment rate. 11. Mr [NAME] has used the Sportelli rate of 5% which the tribunal agrees is appropriate.

5 Freehold value 12. Mr [NAME] has used the extended lease value rather than add the conventional 1%. The tribunal makes this adjustment. Development hope value 13. The tribunal considers the property is fully developed and there is no prospect of further added value. The premium 14. The tribunal determines the appropriate premium to be £16,068. A copy of its valuation calculation is annexed to this decision.

15. The submissions show charges against the freehold title and the valuation has been prepared on the basis these will be cleared by the respondent before completion.

Name: [NAME] [NAME]: 23 August 2022

Appendix: Valuation setting out the tribunal’s calculations

6 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).

7 CASE REFERENCE LON/00AC/OLR/2014/0106

First-tier Tribunal Property Chamber (Residential Property)

Valuation under Schedule 6 of the Leasehold Reform Housing and Urban Development Act 1993

Address Case Reference Valuation Date 02 December 2019 Existing lease Expiry Date 24 March 2131 Years unexpired 111.30 Existing Ground Rent £600 Basis of review Freehold value £1,388,750 Extended lease value £1,375,000 Capitalisation Rate 6.00% Deferment Rate 5.00% Term Value Ground rent 600.00 £ [NAME] 111.30 Years @ 6.00% 16.6412 PV of £1 0 Years @ 6.00% 1.00

Term Value 9,985 £ Reversion value Reversion to freehold value £1,388,750 Pv of £1 111.30 Years @ 5.00% 0.00438

Reversion value 6,084 £ Total Premium payable 16,068 £ [ADDRESS]/00AY/OCE/2020/0219 Basic Information