Tenant Granted Lease Extension with Premium Calculation

OUTCOME: Allowed

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Case Reference : MAN/00BS/OLR/2019/0006

Property : [ADDRESS] [POSTCODE]

Applicant: [redacted] : [APPELLANT]

[NAME] : [RESPONDENT]

[NAME] : [RESPONDENT] of Application : Leasehold Reform, Housing & Urban Development Act 1993 – Section 51(1)-(5)

Date of the Application : 5 April 2019

Date of Application To County Court : 28 September 2018

Tribunal Members : Mrs [NAME] Mrs [NAME] of Decision : 26 July 2019

DECISION

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FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

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1. The Tribunal determines that the premium to be paid for a 90 year lease extension for the property known as [ADDRESS] [POSTCODE] (“the Property”) under the terms of the Leasehold Reform, Housing and Urban Development Act 1993 is £6,980 to the [NAME] and a further £186 to [NAME] excluding costs.

2. The Tribunal orders the terms of the new lease to be granted to the Applicant pursuant to the order of Stockport County Court dated 28 September 2018 in claim number E02SK028 are:

Term: a term of 188 years, 7 months and 10 days which started on 11 May 1977 and which is to end on 21 December 2165, both dates inclusive.

Management: [COMPANY] to be added as a party to the lease as "the Management Company" and to covenant with the tenant and the landlord to observe and perform the obligations set out at Schedule 7 of the lease dated 10 August 1977 and made between [COMPANY] (1) and [NAME] (2)("the Lease").

[NAME]'s covenants: [NAME]'s covenant contained at clause 2 of the Lease to observe and perform the obligations set out in the Sixth Schedule to the Lease is to be repeated in the new lease as a covenant given by the tenant to and for the benefit of the Management Company and the landlord.

3. Remaining terms: as per the draft lease attached to this order.

Reasons for Decision

Introduction

4. The Applicant holds [ADDRESS], Stockport ("the Property") on the terms of the Lease from [NAME] at a ground rent of £15 pa. The Lease term ends on 21 December 2075.

5. [NAME] holds the reversionary interest in the Property on a lease ("the [NAME]") from the [NAME]. The [NAME] term ends on 31 December 2075.

6. The Applicant is entitled to a new lease extending the Lease term by 9o years and subject to a peppercorn rent, pursuant to section 39 and subsequent sections of the Leasehold Reform, Housing the Urban Development Act 1993 as amended ("the Act").

3 7. The [NAME] being a dissolved company, on 28 September 2018 the Applicant applied to the Stockport County Court pursuant to section 50 of the Act. He obtained a vesting order which provides that, following the decision of this Tribunal, the premium payable by the Applicant to the [NAME] for grant of the new lease is to be paid into court and the Applicant is to apply to the District Judge to execute the new lease.

8. The Applicant applied to this Tribunal for determination of the terms of the new lease, pursuant to section 51 of the Act. With his application the Applicant lodged a valuation report prepared for him Mr [APPELLANT]. [APPELLANT] dated 12 June 2018.

9. The Tribunal has made a paper determination as to the terms of the new lease. The Tribunal considered the valuation of the Property and the assumptions and calculations made by Mr. [NAME]. The Tribunal determines that the valuation of the lease extension premium reflecting market evidence provided is £6980 as per the attached valuation.

10. [NAME] is entitled to compensation for loss of the ground rent to 21 December 2075. Mr. [NAME] valued this at £211. However the Tribunal has carried out its own valuation as follows:

Rent

£15.00 per annum YP for 57.3 yrs @6.5% 2% (40%) 12.376818 Diminution in Value £186

11. [NAME] is a company owned by each of the 6 leaseholders at [ADDRESS]. Paragraph 22 (a) of the Sixth Schedule to the Lease reads:

"[NAME] shall procure that at all times the Owner for the time being of the Premises [i.e., the flat] holds [NAME]'s share in [NAME] and is registered as a member of [NAME] as holder of that share."

12. At clause 3 of the [NAME] insure and repair the building, maintain the common parts, prepare service charge accounts and to carry out other management responsibilities as set out in Schedule 7 of the Lease. Notwithstanding the creation of a new lease, these responsibilities have still to be carried out by the leaseholders through their company [COMPANY]. That company is therefore to be joined as a party to the new lease as "the Management Company", and to covenant with the tenant and the [NAME] in the terms of Schedule 7 of the Lease.

13. As a consequence of [NAME]'s re-designation as the Management Company, [NAME]'s obligations contained in the Sixth Schedule to the Lease are to continue as obligations owed to both the [NAME] and the Management Company, and in the new lease clause 2 of the Lease is to be amended accordingly.

4 14. Other terms of the Lease are to remain in effect and, subject to the changes recorded above, the new lease shall take the form of the draft lease attached to this Order.

15. Neither the [NAME] nor [NAME] have incurred costs in this application and therefore no order is made for payment of costs by the Applicant.

Appeal Provisions

16. If any party is dissatisfied with this decision, they may apply to this Tribunal for permission to appeal to the Upper Tribunal (Lands Chamber). Any such application must be received within 28 days after these written reasons have been sent to the parties (Rule 52 of The Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013).

[NAME] 26 July 2019

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