First-tier Tribunal Sets Premium for Property Enfranchisement

OUTCOME: Allowed

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : LON/00AP/OCE/2022/0154

Property : 81 [ADDRESS] [POSTCODE] ([ADDRESS] 16 March 2023) Applicant: [redacted]

[NAME] & [NAME] :

[NAME] Respondent: [redacted] TONY OULDS Representative : None Type of [NAME] : Section 26 & 27 of the Leasehold Reform, Housing and Urban Development Act 1993 (Missing Landlord) Tribunal members : [NAME] [NAME] FCIArb (Valuer Chair) Date of determination and venue : 22 November 2023 at 10 [ADDRESS] [POSTCODE] Date of decision : 22 November 2023

DECISION

Summary of the tribunal’s decision (1) The appropriate premium payable for the collective enfranchisement is £85,826. (eighty five thousand eight hundred and twenty six)

2 Background 1. This is an [NAME] made pursuant to sections 26 & 27 of the Leasehold Reform, Housing and Urban Development Act 1993 (“the Act”) for a determination of the premium to be paid under a vesting order due to a missing landlord of 81 [ADDRESS] [POSTCODE] (the “property”). [ADDRESS] was renamed [ADDRESS] on 16 March 2023.

2. By an [NAME] to the court dated 1 October 2019 the applicants sought an order vesting the freehold interest in their joint names as the freeholders could not be traced.

3. By an order dated 8 September 2022 the Edmonton County Court made an order vesting the freehold interest in the Applicants subject to the terms and price to be determined by the First Tier Tribunal.

4. The order was received by the tribunal on 18 November 2022 and directions were issued on 29 November 2022. A bundle has been submitted to the tribunal including a valuation report and draft TR1. The issues 5. The tribunal has been provided with a valuation report prepared by [NAME] [NAME] [NAME]: (a) The subject property is a a two-storey mid-terrace property split into 2 self-contained flats each of which has been sold on a lease. There is a single front door and both flats have access to the rear garden with the 1st floor flat having access via an internal staircase. Both flats are conventionally laid out with reception rooms facing the street and bedrooms to the rear. Both have kitchen and bath or shower rooms to the rear portion. The ground floor flat has one bedroom and the 1st floor flat 2 bedrooms. Both flats have the benefit of main services and each has independent gas-fired central heating. (b) The valuation date: 1 October 2019 (c) Details of the tenants’ leasehold interests: (i) Dates of leases: each lease is dated 20 December 1983 (ii) Terms of leases: 99 years from 29 September 1983 (iii) Ground rents: £30 per annum for each flat throughout the term; (iv) Unexpired terms at valuation dates: 62.99years; (d) [NAME] [NAME] has used a Capitalisation rate of 6%; and a Deferment rate of 5%.

3 Matters to be determined 6. The following matters are to be determined by the tribunal: (a) Capitalisation rate; (b) Relativity; and (c) Development hope value; and (d) The premium payable. The hearing 7. The case was decided on the papers on 22 November 2023 hearing. The applicants were represented by [NAME] and Cummins solicitors. The respondents were untraced and the representations were received on their behalf.

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.

9. The applicant relied upon the expert report and valuation of [NAME] [APPELLANT] [NAME] dated 31 August 2023. No valuation was submitted on behalf of the respondent. Deferment and capitalisation rates 10. The tribunal agrees that a capitalisation rate of 6% and a deferment rate of 5% are appropriate. Relativity 11. [NAME] [NAME] has used a relativity of 82% based on the Savills 2015 Unenfranchisable graph as used by the tribunal in case reference KA/LON/OOB/ORL/2020/2015 although the Upper Tribunal has been using the 2015 Enfranchisable graph.

12. In this case the tribunal prefers to use the Zucconi rate of 80.32% based on a blending of the [NAME] and [NAME] unenfranchisable graphs.

13. Marriage value is to be divided evenly as the leases have less than 80 years unexpired.

4 Freehold value 14. [NAME] [NAME] has provided details of a number of comparable flats. 15. [ADDRESS] N15 is a two-bedroom ground floor garden flat sold for £374,000 in October 2019. As the flat is larger in size and benefits from an additional bedroom [NAME] [NAME] submits that the subject property will achieve a slightly lower market value. 16. [ADDRESS] N 5 is a one-bedroom ground floor garden flat sold for £300,000 in June 2018. [NAME] [NAME] describes the flat as smaller than the subject property and in an inferior location, supporting a higher value for the subject properties. 17. [ADDRESS] N15 is a two-bedroom split level flat across ground and 1st floors sold for £350,000 in June 2019. There is no private outside space although the property is close to [ADDRESS]. This support a higher value for the subject flats. 18. [ADDRESS] N15 is a two-bedroom split level flat over 1st and 2nd floors sold for £336,000 in July 2018..

19. Based on this evidence [NAME] [NAME] places a value on the ground floor flat of £350,000 and for the 1st floor flat £375,000 totalling £725,000. Each flat is assumed to be on a long leasehold basis i.e. for a term of more than 100 years. The tribunal’s determination 20. The tribunal has considered the evidence submitted and also used its own expert knowledge. The tribunal agrees that the values placed on the flats by [NAME] [NAME] are appropriate. The total long leasehold figure of £725,000 represents 99% of the freehold value which comes to £732,323 based on the market convention. Hope value 21. The tribunal considers that the property is fully developed and there is no hope value to be added in this case. Valuation 22. The tribunal assesses the premium to be paid at £85,826 as set out in the attached valuation.

5 Transfer 23. The draft form of transfer is approved Name: [NAME] [NAME]: 22 November 2023

6 Appendix: Valuation setting out the tribunal’s calculations

Address Client FTT Sub-Address Ground and First floor Valution Date 01 October 2019 Existing lease Expiry Date 28 September 2082 Years unexpired 62.99 Existing Ground Rent3 £60 Basis of review Capitalisation Rate 6.00% Deferment Rate 5.00% total Long Lease Figure £725,000 F/H to Long lease change 99% Freehold figure £732,323 Real World Short Lease Value No Act Discount Relativity Rate 80.32% Current Lease Value £588,202 EXISTING FREEHOLD TERM VALUE TERM VALUE Rent Years Yield Cap Rate P/V Multiplier Term Value Term 1 £60 62.99 6.00% 16.2423 1 16.2423 £975 £975 REVERSION VALUE Capital Value Years to Reversion Deferment Rate P/V Reversion Value £732,323 62.99 5.00% 0.0463 £33,879 TOTAL EXISTING FREEHOLD VALUE £34,854 MARRIAGE VALUE CALCULATION Value of Freeholders Current Interest £34,854 Value of Leaseholders Current Interest £588,202 £623,056 Value of Leaseholders New Interest £725,000 Difference £101,944 50% of Difference £50,972 Leaseholder Payment £85,826 Basic Infomation [ADDRESS] N15 ([ADDRESS] from 16/3/23)

7 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).

8 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

Premium payable for the freehold interest in [Property]

Valuation date: [Date]