First-tier Tribunal Sets Premium for Freehold Acquisition

OUTCOME: Allowed

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : LON/00AP/OCE/2021/0035 HMCTS Code : P: PAPER REMOTE Property : 6 [ADDRESS] [POSTCODE] Applicants : [redacted] Mr [COUNSEL] & Mrs [COUNSEL] (2) Representative : [COUNSEL] [NAME] [RESPONDENT] Respondent : [redacted] Representative : none Type of [NAME] : Section 24 of the Leasehold Reform, Housing and Urban Development Act 1993 Tribunal members : Judge D [NAME] of determination and venue : 10th June 2021 at 10 [ADDRESS] [POSTCODE] Date of decision : 10th June 2021

DECISION

Covid-19 pandemic: description of hearing This has been a remote hearing on the papers which has not been objected to by the parties. The form of remote hearing was P:PAPERREMOTE. A face-to- face hearing was not held because it was not practicable and no-one requested the same. The documents that we were referred to are in the Applicants’ bundle of 202 pages. The Respondent has played no part in these proceedings,

2 being a [NAME]. The order made is described at the end of these reasons. Summary of the tribunal’s decision (1) The tribunal determines that the premium payable by the applicants for the enfranchisement of the subject property situated at 6 [ADDRESS] [POSTCODE] is £30,520. (2) The Tribunal approves the terms of transfer in the form of TR1 relied upon by the applicants at pages 185 to 188 of the applicants’ bundle of documents. Background 1. On 18th February 2021 Deputy District Judge Sharkey, sitting at the County Court at Edmonton, made an order pursuant to Section 26(1) of the Leasehold Reform, Housing and Urban Development Act 1993 (“the Act”) vesting the freehold title in 6 [ADDRESS] [POSTCODE] (“the property”) in the Applicants.

2. The Judge ordered that the matter be transferred to this Tribunal to determine the terms upon which the applicants shall be entitled to acquire the property. Evidence 3. We have been provided with a detailed valuation report by Mr [NAME] (Hons) MRICS dated 5th January 2021. He computes the premium to be £30,520. Lease details 4. The Respondent [NAME] is the lessor of the Property which comprises a two-storey mid-terrace house which has been converted into two flats. Flat 6 is the ground floor flat which has the benefit of a garden and an extension for the bathroom, and flat 6a which has been extended into the loft area. The property is in the London Borough of Haringey and is situated on [ADDRESS] which leads to the west to [ADDRESS], and to the east joins [ADDRESS] at a T-junction. A railway line runs parallel to [ADDRESS]. The property is located opposite a [NAME] and a [COMPANY]. Both flats are accessed by the communal front door. The Council operates a residents parking scheme, but demand for spaces is competitive. In addition, parking in the area is adversely affected on football match days when there are coach parking areas. College road bins are stored on the pavement.

3 5. The particulars of the two flats are: (i) Ground floor flat 6: This is occupied under a lease for a term of 99 years from 25th March 1985, with some 63.2 years unexpired with a ground rent of £50 per annum. It comprises a hallway leading to a front reception room, a bedroom, and to the rear of the flat a lounge diner. This leads directly to the bathroom/wc which is housed in a rear extension. The garden is accessed from the kitchen. The Ground floor flat has sole use of the garden. The approximate floor area of the flat is 566 sq.ft (52.6 sq.m). (ii) The first floor flat 6A: This is occupied under a lease for a term of 189 years from 25th March 1985, with some 153.2 years unexpired. It is noted that the lease was extended under the 1993 Act, granted pursuant to proceedings under section 50(1) of the 1993 Act on the basis that the landlord could not be found. It comprises on the first floor two bedrooms, a kitchen/reception room, and a bathroom. There are stairs leading to a loft room, which we are told do not comply with current Building Regulations. Valuation date 6. The valuation date is 5th January 2021, namely the date of the [NAME] to the Court. Reasons for the tribunal’s determination 7. The tribunal accepts the valuation report of Mr [NAME]. Also accepted is the valuation date relied upon by Mr [NAME] as 5th January 2021 being the date of issue of the applicants’ claim in the County Court.

8. The tribunal considered Mr [NAME] use of the figures of 6.5% (capitalisation rate) and 5% (deferment rate) are appropriate. Mr [NAME] has submitted evidence of comparables to substantiate the value of the two flats. One of those comparables being the sale value for flat 6 at auction in 2020. This is accepted by the tribunal.

9. He has used a 1% uplift for the freehold vacant possession value which is also accepted.

10. The tribunal noted that Mr [NAME] had used the prime central London graphs on relativity produced by [NAME] and [NAME]. Whilst this property is outside central London, these graphs are now commonly used for the Greater London area following a number of cases determined by the Upper Tribunal. Mr [NAME] computed a relativity for his valuation based on a combination of the value

4 calculated from a sale of flat 6 in 2020 and has adjusted this to arrive at a relativity of 82.63% which we accept is reasonable for this property.

11. The tribunal accepted Mr [NAME] use of the UK House Price Index by type of property in Haringey, as well as comparables all in the local postcode and of similar flats in the area on [NAME] and [NAME].

12. In conclusion the Tribunal accepts the valuation report of Mr [NAME] and finds that the total premium payable by the applicants is £30,520, as set out in Appendices 3 and 4 of his valuation report.

13. The tribunal approves the terms of the acquisition as set out in the form TR1 relied upon by the applicants at pages 185 to 188 of the applicants’ bundle.

14. The tribunal now remits the [NAME] back to the County Court at Edmonton for any final orders that may be required.

The premium 15. The tribunal determines the appropriate premium to be £30,520. A copy of its valuation calculation is annexed to this decision.

Name: Judge D Brandler Date: 10th June 2021

Appendix: Valuation setting out the tribunal’s calculations

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

5 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).

6 APPENDIX: CASE REFERENCE LON/00AP/OCE/2021/0035

First-tier Tribunal Property Chamber (Residential Property)

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

Premium payable for the freehold interest in 6 & 6a [ADDRESS] [POSTCODE]

Valuation date: 5th January 2021

Valuation of Freehold Interest

Flat 6 Freeholder present interest: Ground rent:

£50

YP 63.2 years @ 6.5% 15.10 £ 755

Reversion to

£272,700 PV £1 in 63.2 years @ 5% 0.045757 £12,478 £13,233

Freeholder proposed interest: £0

Diminution in value of freeholder’s interest

£13,233

Marriage Value Value of interests after the lease freehold enfranchisement

Freeholder: £0 Leaseholder: £272,700

£272,700 Value of interests prior to the freehold enfranchisement

Freeholder: £ 13,233 Leaseholder: £225,332

£238,565

Marriage value:

£ 34,135 50% of marriage value

£17,068

Premium payable

£30,301

Appurtenant land

£25 £30,326

7 Flat 6a Freeholder present interest: Ground rent:

£0

Reversion to

£297,950 PV £1 in 153.2 years @ 5% 0.000567 £169

Freeholder proposed interest: £0

Diminution in value of freeholder’s interest:

£169

Marriage Value £0

Premium payable

£169

Appurtenant land

£25 £194

TOTAL PREMIUM PAYABLE

£30,520