Lease Extension Premium Set at £37,660 - First-tier Tribunal Decision

OUTCOME: Allowed

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : LON/ 00AJ/OLR/2021/0147 Property

FLAT 5 40 BIRKBECK ROAD ACTON LONDON [POSTCODE] Applicant : [redacted] : [APPELLANT] Respondent : [redacted] Representative : NA Type of [NAME] : Section 50 and 51 of the Leasehold Reform, Housing and Urban Development Act 1993 Tribunal members :

Judge Shepherd Kevin Ridgeway MRICS

Date of determination and venue : 30th March 2021 at 10 [ADDRESS] [POSTCODE] on the papers Date of decision : 30th March 2021

DECISION

Summary of the tribunal’s decision The appropriate premium payable for the new lease is £37660. The proposed lease is approved.

2 Background 1. This is an [NAME] made by the applicant leaseholder pursuant to section 50 and 51 of the Leasehold Reform, Housing and Urban Development Act 1993 (“the Act”) for a determination of the premium to be paid for the grant of a new lease of [ADDRESS] [POSTCODE] (the “property”).

2. On 4th December 2020 [NAME] at Brentford County Court made an order pursuant to s. 50 of the Act to the effect that the Applicant was entitled to a new lease. The freeholder landlord is missing. The case was transferred to the Tribunal to determine the value of the new lease. The property

3. The property comprises a three bedroom second floor flat constructed about 120 years ago. It is located on the eastern edge of [ADDRESS], close to its junction with [ADDRESS]. All local amenities, including Acton central mainline rail station are located within a short distance walk of the subject property.

4. The Tribunal did not inspect the property but had the benefit of photographs and have checked the location on google maps. The report of [NAME] of [COMPANY] dated 26th February 2021 gave a clear and detailed description of the property. The Tribunal accepts the description is accurate. The tribunal’s determination

3 5. The tribunal determines that the value of the new leasehold at the date of the [NAME] was £37660. The Tribunal is also satisfied as to the proposed form of the new lease.

Reasons for the tribunal’s determination 6. The right to a new lease is conferred by Ch 2 of Pt 1 of the 1993 Act. By exercising the right the tenant acquires a new lease of the flat in substitution for his or her existing lease for a term expiring 90 years after the term date at a peppercorn rent ( s.56(1)). The tenant pays a premium which compensates the landlord for the loss of the remainder of the term. In the present case the landlord is missing and the procedure pursuant to ss50 and 51 of the Act has been followed.

7. The premium for the new lease is calculated in accordance with Sch 13, para 2 of the Act and is the aggregate of the following figures : (a) The diminution in value of the landlord’s interest in the flat; (b) The landlord’s share of the marriage value; (c) Any amount of compensation payable.

8. The calculation carried out by Mr [NAME] appears broadly sound. A calculation carried out by the Tribunal is attached as a schedule to this determination. The Tribunal has also considered the contents of the proposed new lease and is satisfied that they are adequate. The premium 9. The tribunal determines the appropriate premium to be £37660 A copy of its valuation calculation is annexed to this decision.

Name: Judge Shepherd Date: 30th March 2021

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Appendix: Valuation setting out the tribunal’s calculations

Valuation for lease extension

[ADDRESS],[POSTCODE]

Valuation Date 23/12/2019

Lease Commencement 29/09/1984

Lease Term 99.00 years

Expiry Date

28/09/2083

Unexpired Term

63.77 years

Long Lease value

£400,000

Freehold VP value £404,000 +1% long lease value

Term 1 Term 2 Term 3

Ground rent £200.00 £300.00 £0.00

Reversion years

30.77 33.00 0.00

Capitalisation rate 7%

Deferment rate 5%

Compensation

£0.00

Relativity 85.50%

Diminution of Landlord's interest

Ground rent £200

[NAME] 30.77 yrs @ 7.00% 12.50430742

£2,501

Rent Review 1 £300

[NAME] 33.00 yrs @ 7.00% 12.75379002

PV of £1 30.77 yrs @ 7.00% 0.12469848

£477

Rent Review2 £0

[NAME] 0.00 yrs @ 7.00% 0

PV of £1 63.77 yrs @ 7.00% 0.[PHONE]

£0

Reversion to VP value £404,000

PV 63.77 yrs @ 5.00% 0.04454084

£17,994

Value existing freehold

£20,972

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L/lord's interest on reversion of new lease

FH VP

£404,000

PV 153.77 yrs @ 5.00% 0.00055172

-£223

£20,750

Landlord's share of Marriage Value

Val. Tenant's interest new long lease £400,000

Val. l/lord's interest after reversion of new lease

£223

£400,223

Less

Val. l/lord's interest existing lease Relativity 85.50% £345,420

Val. tenant's interest existing lease £20,972

£366,392

£33,830

Marriage Value at 50% £16,915

Compensation £0

PREMIUM £37,665

SAY

£37,660

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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 13 of the Leasehold Reform Housing and Urban Development Act 1993

Premium payable for an extended leasehold Interest in [Property]

Valuation date: [Date]