Tenant Granted Lease Extension Without Landlord Found

OUTCOME: Allowed

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : KA/LON/00AC/0LR/2020/0177 Property : 49A [ADDRESS] [POSTCODE] Applicant : [redacted] : [NAME] [RESPONDENT] Respondent : [redacted] : Not applicable – missing landlord Type of application : Application under sections 50 and 51 of the Leasehold Reform Housing & Urban Development Act 1993 Tribunal members : Mr [NAME] B [NAME] : 10 [ADDRESS] [POSTCODE] Date of paper determination and decision : 24th March 2020 and 3rd April 2020

DECISION

© CROWN COPYRIGHT Decisions of the Tribunal (1) The Tribunal determines the price to be paid by the applicant for the lease extension is £25,800. (2) The terms of the draft lease are provided for in paragraph 13 below. The Background 1. This is an application under Section 50 of the Leasehold Reform Housing & Urban Development Act 1993 ('the 1993 Act') pursuant to an order issued at the County Court at Edmonton on 30 January 2020.

2. Section 50 of the 1993 Act concerns claims for lease extension where the relevant landlord cannot be found. It enables the court to make a vesting order in respect of any interests of the landlord which are liable to acquisition.

3. Under Section 50 of the Act, the rôle of the Tribunal is to determine the appropriate sum to be paid into Court in respect of the landlord's interests and also to approve the form and terms of the proposed new lease.

4. The applicant in this matter is [APPELLANT], she is the qualifying tenant of the first-floor flat namely, 49A [ADDRESS] [POSTCODE] ('the Property'). The respondent freeholders are [RESPONDENT] [NAME] [APPELLANT] & [NAME].

5. On 29 November 2019 the applicant issued a Part A Claim at the County Court at Edmonton for a vesting order under Section 50(1) of the 1993 Act seeking to extend the lease under the terms of the Act. The applicant has been unable to ascertain the whereabouts of the respondent and was, therefore, unable to serve a notice on them pursuant to Section 13 of the 1993 Act.

6. The applicant has provided the Tribunal with a valuation report prepared by Mr [NAME] dated 20 February 2020.

7. Mr [NAME] is of the view the premium payable for the leasehold extension is £16,100.

8. Sales' transaction evidence is included in the Expert’s valuation report to justify the extended leasehold value. This comparable market evidence together with his opinion on appropriate relativity, deferment and capitalisation rates is used to underpin the Expert Opinion of the premium payable. No evidence is provided to corroborate the current leasehold value.

9. The Tribunal has relied upon their knowledge and experience of the property market in the Finchley area in making this determination. They have also had regard for recent and relevant Upper Tribunal decisions particularly concerning the determination of leasehold relativity rates. The Determination 10. The Tribunal accepts the opinions expressed by Mr [NAME] in his valuation report dated 20 February 2020, save that:

3 (i) It is public record that the subject property was marketed between January and July 2019 at an asking price of £320,000. No sale was achieved at this price. This asking price at marketing close to the valuation date of 29 November 2019 contradicts the long lease value placed upon the subject property by the Expert of £275,400. It is noted that two of the comparables submitted were sold between 12 and 18- months prior to the valuation date of 29th November 2019. The most recent comparable sale was in March 2019. The Tribunal has experience and knowledge of the property market in this locality . It has had regard for the recent marketing price of the subject and the transaction dates of the comparable evidence.

After consideration of these factors the Tribunal has determined the market value for the long leasehold of the property is £295,000. This reflects the passage of time, comparable evidence presented by the Expert and the previous marketing price of the subject.

(ii) No market evidence on the current lease value is submitted in this case. The expert relies upon a review of a RICS research report dated October 2009 on relativity and the Savills unenfranchiseable 2015 and Gerald Eve 2016 graphs. The reliability of the RICS relativity graphs is discussed in the decision Sloane Stanley –v– Mundy [2016] UKUT 02333 (LC) and in [NAME] & Others –v– [COMPANY] [2016] UKUT 468. The inference from these authorities is that the preferred source of graphical relativity data is the Savills and [NAME] graphs. (iii) In determining the relativity, the Tribunal is not content to rely upon historic and discredited relativity graphs from 2009 and places greater weight on the recent guidance given by the Upper Tribunal on relativity. The authorities given most weight are: • [COMPANY] ([COMPANY]) [2017] UKUT 494 (LC), which was a decision about properties situated at [ADDRESS], Chelmsford. These properties situated beyond PCL were assessed by the UT with a relativity of just under 82% for an unexpired term of 66.8-years. The Upper Tribunal relied solely upon the Savills's 2015 graph as the source of this relativity; and • [NAME] –v– [COMPANY] [2018] UKUT 311 (LC), a decision involving [ADDRESS], Tottenham, London N17. The subject property was again assessed and the UT relied upon the 2015 Savills's un-enfranchiseable graph to determine the relativity rate of 86.9% for an unexpired term of 75.23-years. • In [NAME] –v– [COMPANY] [2019] UKUT 190 (LC), and the [NAME] –v–Zucconi & Ancor [2019] UKUT 242 (LC), the Upper Tribunal also relied upon the Savills and [NAME] unenfranchiseable graphs to determine relativities. The properties in both of these cases are situated beyond central London and the data drawn from the relativity graphs was deemed appropriate without adjustment.

4 • In [COMPANY] and [COMPANY] appeals [2017] UKUT 463 (LC), the Upper Tribunal decided the same graphs could be appropriately used to determine leasehold relativity in the Midlands. (iv) In determining relativity the Tribunal must focus on the state of the market in North London and Finchley area at the valuation date in the absence of any evidence of local transactions, it must consider what relativity graph was used by the local market at the time, or which graph best reflects the operation of that local market. The Upper Tribunal has directed that Savills 2015 and [NAME] 2016 unenfranchiseable graphs are reliable sources of relativity data beyond central London. It is our opinion the market reflects recent and relevant Tribunal guidance on the calculation of lease premiums. (v) We therefore take an average of the relativities for an unexpired term of years from the GE's 2016 and Savills's 2015 graphs this produces a figure of 85.61% and this relativity is adopted by the Tribunal.

11. The adjusted calculation has resulted in a premium of £25,800. A copy of the Tribunal's valuation is attached to this decision.

12.

Accordingly, the Tribunal determines the premium to be paid in respect of the leasehold is £25,800.

13. The Tribunal also approves the draft proposed lease included in the bundle at divider 12 subject to the inclusion at LR7 of £25,800 and that these monies less any costs setoff are paid into court.

14. This matter should now be returned to the County Court sitting at Edmonton under claim FO2.ED643 in order for the final procedures to take place.

Valuer Chairman: [NAME] 3rd April 2020

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© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : KA/LON/00AC/0LR/2020/0177 Property : 49A [ADDRESS] [POSTCODE] Applicant : [redacted] : [COUNSEL] Solicitors LLP Respondent : [redacted] : Not applicable – missing landlord Type of application : Application under sections 50 and 51 of the Leasehold Reform Housing & Urban Development Act 1993 Tribunal members : Mr [NAME] : 10 [ADDRESS] [POSTCODE] Date of paper determination and decision : 24th March 2020 and 3rd April 2020 Slip rule amendments : 19th May 2020 AMENDED

DECISION

Amended under rule 50 (the slip rule) A mathematical mistake is corrected in this amended decision, under rule 50 of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013.

© CROWN COPYRIGHT Decisions of the Tribunal (1) The Tribunal determines the price to be paid by the applicant for the lease extension is £25,800 £24,500. (2) The terms of the draft lease are provided for in paragraph 13 below. The Background 1. This is an application under Section 50 of the Leasehold Reform Housing & Urban Development Act 1993 ('the 1993 Act') pursuant to an order issued at the County Court at Edmonton on 30 January 2020.

4. The applicant in this matter is [APPELLANT], she is the qualifying tenant of the first-floor flat namely, 49A [ADDRESS] [POSTCODE] ('the Property'). The respondent freeholders are [NAME].

(ii) No market evidence on the current lease value is submitted in this case. The expert relies upon a review of a RICS research report dated October 2009 on relativity and the Savills unenfranchiseable 2015 and [NAME] 2016 graphs. The reliability of the RICS relativity graphs is discussed in the decision Sloane Stanley –v– Mundy [2016] UKUT 02333 (LC) and in [NAME] & Others –v– [COMPANY] [2016] UKUT 468. The inference from these authorities is that the preferred source of graphical relativity data is the Savills and [NAME] graphs. (iii) In determining the relativity, the Tribunal is not content to rely upon historic and discredited relativity graphs from 2009 and places greater weight on the recent guidance given by the Upper Tribunal on relativity. The authorities given most weight are: • [COMPANY] ([COMPANY]) [2017] UKUT 494 (LC), which was a decision about properties situated at [ADDRESS], Chelmsford. These properties situated beyond PCL were assessed by the UT with a relativity of just under 82% for an unexpired term of 66.8-years. The Upper Tribunal relied solely upon the Savills's 2015 graph as the source of this relativity; and • [NAME] –v– [COMPANY] [2018] UKUT 311 (LC), a decision involving [ADDRESS], Tottenham, London N17. The subject property was again assessed and the UT relied upon the 2015 Savills's un-enfranchiseable graph to determine the relativity rate of 86.9% for an unexpired term of 75.23-years. • In [NAME] –v– [COMPANY] [2019] UKUT 190 (LC), and the [NAME] –v–Zucconi & Ancor [2019] UKUT 242 (LC), the Upper Tribunal also relied upon the Savills and [NAME] unenfranchiseable graphs to determine relativities. The properties in both of these cases are situated beyond central London and the data drawn from the relativity graphs was deemed appropriate without adjustment.

11. The adjusted calculation has resulted in a revised premium of £24,500. A copy of the Tribunal's revised valuation is attached to this decision.

12.

Accordingly, the Tribunal determines the premium to be paid in respect of the leasehold is £24,500.

13. The Tribunal also approves the draft proposed lease included in the bundle at divider 12 subject to the inclusion at LR7 of £24,500 and that these monies less any costs setoff are paid into court.

Valuer Chairman: [NAME] 3rd April 2020 Corrected under Slip Rule 19th May 2020

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Property: 49A [ADDRESS] [POSTCODE] Reference: KA/LON/00AC/OLR/2020/0177 Lease and Valuation Data Lease Term: 24/06/1992 Lease Expiry date: 23/06/2091 Unexpired term as at valuation date: 71.57 years Date of Valuation 29/11/2019 Rent receivable by landlord: Payable from valuation date for 71.57 years 12.60 £ Values Extended lease value on statutory terms 295,000 £ Notional Freehold 297,980 £ LHVP with current term unexpired 255,101 £ Relativity 85.6% Capitalisation rate (%) 7.00 Deferment rate (%) 5.00 Value of Freeholders present interest Term 1 Ground rent payable 12.60 £ YP @ 71.57 years @ 7% 14.17302 179 £ Reversion Freehold in vacant possession 297,980 £ Deferred @ 71.57 years @ 5% 0.03044 9,071 £ Current value of the freeholders interest 9,250 £ Less Freehold value after leasehold extension 297,980 £ PV of £1 in 161.57 years at 5% 0.00038 112 £ Freeholders interest value 9,137 £ Marriage value Value of flat with long lease on statutory terms 295,000 £ Landlords proposed interest 112 £ 295,112 £ Less Value of Leaseholders existing interest 255,101 £ Value of Freeholders current interest 9,250 £ 264,350 £ Marriage value Total 30,762 £ Division of Marriage Value equally between Freeholder 15,381 £ Leaseholder 15,381 £ Price payable to Freeholder Value of freeholders current interest 9,137 £ Plus share of marriage value 15,381 £ Total 24,518 £ Say 24,500 £