Tenant Can Acquire Freehold Under Unidentified Landlord - First-tier Tribunal Decision

OUTCOME: Allowed

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Case Reference : CAM/22UC/OAF/2019/0002

Property : 64 [ADDRESS] [POSTCODE]

Applicants

: [redacted] : [RESPONDENT]

Respondent: [redacted] : [NAME] to determine the price payable under section 9 and 27 of the Leasehold Reform Act 1967

Tribunal Members : [NAME] (Hons)

Judge Wayte

Date of Decision : 19 June 2019

_______________________________________________

DECISION ____________________________________

© CROWN COPYRIGHT 2018

DECISION

The Tribunal determines that the price payable for the freehold of the [ADDRESS] [POSTCODE] is £37,061 and the amount of unpaid pecuniary rent payable for the property up to the date of the Conveyance is nil.

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

2 BACKGROUND

1. On 15th February 2019 the applicants Mr [NAME] and Miss [NAME] [NAME] , the leaseholders of the Property, made [NAME] to the County Court at Chelmsford seeking the right under Part 1 of the Leasehold Reform Act 1967 (the Act) to acquire the freehold of the Property.

2. On 5th April 2019 at the County Court at Chelmsford, District Judge Mitchell found that the Claimants were prevented from giving notice to the [RESPONDENT] or superior title holder pursuant to the provisions of the Leasehold Reform Act 1967 Section 27 because the identity of the [RESPONDENT] or superior title holder, if any, cannot be found.

3. He further declared that the amount of rent payable in respect of the property is not known and has not been paid in living memory.

4. He ordered that the Leasehold Valuation Tribunal (First-tier Tribunal) determine (a) the price payable in accordance with Section 27(5) of the Act (in the event of the [NAME] succeeding) and (b) the amount or estimated pecuniary rent payable for the property up to the date of the conveyance that remains unpaid.

5. Directions were given on 15 May 2019. The Directions were to the effect that the case could be dealt with without the need for an oral hearing and required the applicants to notify the Tribunal should they require an oral hearing to be held. The applicants did not request an oral hearing.

The Lease

6. The applicants acquired their leasehold interest in [ADDRESS] on 4 May 2000.

7. The property is registered at the Land Registry under title number EX639841.

8. In a witness statement made by [NAME], [COMPANY], we are told that the house was held under a lease dated 24 October 1841 for an original term of 200 years. No particulars of rent are provided. He also states that to the best of the Claimants’ knowledge the original lease has been lost and that it is not apparent from the Land Registry title documentation what rent, if any, was payable under the terms of the lease.

The Law

9. Section 27(5) of the Act provides: The appropriate sum which in accordance with Section 27(3) of the Act to be paid in to Court is the aggregate of a. Such amount as may be determined by (or on appeal from) the appropriate Tribunal to be the price payable in accordance with Section 9 above; and b. The amount or estimated amount (as so determined) of any pecuniary rent payable for the house and premises up to the date of the Conveyance which remains unpaid.

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10. Section 9 of the Act sets out in detail the assumptions to be made and the procedure to be followed in carrying out the valuation. The effect of Section 27(1) is that the valuation date is the date on which the [NAME] was made to the Court – in this case 15 February 2019

11. There are various bases set out in Section 9 of the Act and the Tribunal determines that the appropriate basis is in Subsection 9(1) being that on 31 March 1990 the Rateable value of the house and premises was not above £5oo.

The Property

12. The valuation report provided by Mr [NAME] describes the property as an extended semi-detached house thought to have been built in 1841 in an established residential location close to the town centre.

13. The original house is of brick construction with part of the extension work being timber framed. The elevations are fully rendered with a pitched roof of concrete pantiles.

14. Accommodation is 2 receptions and kitchen/breakfast room to the ground floor and 4 bedrooms and bathroom/wc to the first floor. There is single garage and parking for two cars. There are gardens to the front and rear.

Evidence

15. The Applicants rely on a report from [NAME] of Braintree based Joscelyne Chase Property Consultants and a Fellow of the Royal Institution of Chartered Surveyors and a Registered Valuer.

16. Mr [NAME] provides a short report in which he describes the property, outlines the tenure and provides a valuation. He also provides the sales particulars for the property which he informs the tribunal was being offered for sale immediately prior to the [NAME] by a local estate agent and was under offer at £325,000 subject to the tenure aspect being resolved.

17. He provides a copy of the sales particulars detailing the property as being on the market at £332,959. He does not provide any comparable sales nor any basis or explanation as to why he has adopted the various return rates in his calculation in arriving at the Enfranchisement price of £37662.

Determination

18. Mr [NAME] has adopted a three-stage valuation following [COMPANY] [2012] UKUT 4 (LC)

4 19. The first stage requires capitalisation of the ground rent for the term. We agree with Mr [NAME] that on the basis there is no ground rent demanded or paid that the value of the unexpired term of 23 years is nil

20. The second stage requires the Tribunal to determine and capitalise a section m modern ground rent. This requires the Tribunal to determine Entirety Value, Site Apportionment and deferment rate.

21. In relation to Entirety Value Mr [NAME] adopts the ‘under offer’ price of £325,000 as his market value of the property. He does not offer any comparables to support this. It appears to the Tribunal likely that the sale price may be somewhat impacted by the potential delay and uncertainty of the vendor having to make an [NAME] to the County Court. The Tribunal has performed an internet search and using its skill and experience has adopted the asking price of £332,950 as more fairly representing the Entirely value

22. Mr [NAME] adopts a figure of 33.33% Site Apportionment. The house stands on a good plot. It is a semi-detached house with parking for two vehicles and a garage at the side of the house itself. We therefore find that the appropriate figure for Site Apportionment is 33.33%. We adopt a deferment rate of 6% on the basis of Mr [NAME] valuation, which whilst unsupported by any evidence is not untypical.

23. At the third stage we have to value the reversion to a standing house on the expiry of the 5o year lease extension. It is necessary to reflect the tenant's right to remain in possession after the 5o year lease extension under Schedule 10 to of the Local Government and Housing Act 1989. Mr [NAME] has made no deduction (nor any mention) of this. The Tribunal, having regard to the facts of the case, the relatively short unexpired term and case law precedent has adopted a 15% deduction to reflect rights under Schedule 10 .

24. There is no unpaid rent. There has been no demand for rent. The provisions of sections 47 and 48 of the [RESPONDENT] and Tenant Act 1987 and section 166(1) Commonhold and Leasehold Reform Act 2002 (requirement to notify long leaseholders that rent is due) have not been complied with. A tenant is not liable to make payment of rent under a lease unless the [RESPONDENT] has given him notice relating to the payment.

25. The valuation is set out at Appendix 1

26. The case must now be transferred back to Chelmsford County Court.

Judge: [NAME] [NAME]: 19 June 2019

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Appendix 1

Valuation – 64 [ADDRESS] [POSTCODE]

£ Value of unexpired 23 years 0 Revertion to modern day ground rent House value £332,950 Plot value at 33.3% £110,983 Ground rent @ 6% £6,659 YP 50 years @ 6% 15.76 PV £1 23 years @ 6% 0.262 4.129 £27,495 Revert to standing house value £332,950 Less Schedule 10 rights @15% £49,943 £283,007 PV £1 73 years @ 4.75% 0.0338 £9,566 £37,061

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ANNEX – RIGHTS OF APPEAL

1. 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 at the Regional Office which has been dealing with the case.

2. 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].

3. If the [NAME] is not made within the 28-day time limit, such [NAME] must include a request to 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.

4. The [NAME] for permission to appeal must identify the decision of the Tribunal to which it relates (ie 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.