Tenant Granted New Lease Under Leasehold Reform Act

OUTCOME: Allowed

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : LON/00AQ/OLR/2022/0558 Property : 148A [ADDRESS] [POSTCODE] Applicant : [redacted] Representative : [COUNSEL] [RESPONDENT] Respondent : [redacted] Representative : None Type of [[[NAME]]] : Section 51 of the Leasehold Reform, Housing and Urban Development Act 1993 Tribunal members : Judge T Cowen Date of decision : 12 September 2022

DECISION

Summary of the tribunal’s decision The Tribunal has made the following determinations pursuant to section 51 of the Leasehold Reform Housing and Urban Development Act 1993 (“the Act”) and pursuant to paragraph 4 of the order dated 20 June 2022 of Deputy District Judge Evans: (a) The appropriate terms of acquisition are those which are set out in paragraphs (b) and (c) of this order.

2 (b) The Tribunal approves the form of lease attached to this order (with the changes indicated thereon and highlighted in yellow) for the purpose of giving effect to the relevant terms of acquisition (c) The Tribunal determines that: (i) The premium payable in accordance with Schedule 13 of the Act is the sum of £35,550.00. (ii) The amount of £55 is due to the [[NAME]] from the Applicant by way of outstanding ground rent.

REASONS FOR THE TRIBUNAL’S

DECISION 1. The Property is a two bedroom self-contained upper maisonette in a two storey mid-terraced converted house.

2. The Respondent is the registered freehold proprietor of the said house under title number NGL1987.

3. By a lease dated 12 July 1982, the Property was let by the Respondent to himself and [RESPONDENT] for a term of 99 years commencing on 25 March 1982. The said lease was registered on 16 August 1982 at HM Land Registry under title number NGL430650.

4. The lease was assigned to the Applicant on 29 July 2011 and she was registered as leasehold proprietor on 7 September 2011.

5. On 24 February 2021, the Applicant served a notice under section 42 of the Act on the Respondent by sending it to the Property address, which is the address given by the Respondent as his address on the register at HM Land Registry.

6. Pursuant to the provisions of the Act, the notice requested a new lease of 189 years from 25 March 1982 at a peppercorn rent and otherwise on the same terms as the existing lease, for a proposed premium of £25,600 subject to section 57 of the Act.

7. The deadline for a counter-notice was 30 April 2021.

8. The Respondent did not serve a counter-notice on time or at all.

3 9. The Applicant commenced proceedings in the county court on 2 November 2021 under section 48 of the Act seeking a determination and vesting order for a new lease.

10. The Respondent has not responded to or participated in the county court proceedings.

11. By order of Deputy District Judge Evans dated 20 June 2022, the county court ordered that the existing lease should be surrendered and a new lease granted and made a vesting order to take effect after the terms of acquisition have been determined by this Tribunal.

12. The said county court order referred the matter to this Tribunal for the purpose of carrying out the following: a. Determine the appropriate terms of acquisition b. Approve a form of new lease which contains such provisions as may be approved for the purpose of giving effect to the relevant terms of acquisition; and c. Determine the following amounts: i. The premium payable in accordance with Schedule 13 to the Act; and ii. Any amounts or estimated amounts as being, at the time of execution of the lease, due to the [[NAME]] from the Applicant (whether due under or in respect of the Claimant’s lease or in respect of any agreement collateral thereto)

13. In response to the directions made by the Tribunal on 21 July 2022, the Applicant has obtained an updated valuation report, has provided a draft new lease and has answered questions posed by the Tribunal. The Applicant has also compiled all of the above into a bundle which I have used for the purposes of [[NAME]] this decision. Terms of acquisition 14. The terms of acquisition shall be on the basis of the draft lease which I have approved and attached to this order. Draft lease 15. I have reviewed the draft lease which has been supplied by the Applicant. I have approved its terms save for the following:

4 i. I have crossed through the premium proposed by the Applicant (£25,600) in its section 42 notice and replaced it with the premium which I have determined (£35,550) ii. I have crossed through the part of the recital which states that the landlord has agreed to the grant of the new lease, because that does not reflect the true position.

16. I have made those changes on the attached draft lease and I have highlighted the changes in yellow for convenience of reading. The crossed-through sections and yellow highlighting should be removed before the lease is prepared for its final engrossment and execution. Premium 17. I have reviewed the valuation report of [[NAME]] BSc FRICS which is dated 25 August 2022 and is based on inspections which took place on 25 January 2021 and 24 August 2022. I have not inspected the Property nor have I inspected any of the comparable properties listed by Mr [[NAME]].

18. Mr [[NAME]] has applied a 6% rate for capitalising ground rent and a 5% deferment rate having regard to the Sportelli decision. He has valued the vacant possession value of the Property with an extended lease in the sum of £264,928.

19. In order to calculate marriage value, he determined the unenfranchiseable relativity at 77.9% to produce a short lease value of £208,464. The resulting marriage value is calculated at £41,830.

20. He has made a further deduction for the value of the benefit of the Act in the sum of £12,500.

21. As a result of all of the above, the [[NAME]] has valued the premium in the sum of £35,549.

22. I agree with the opinion of the [[NAME]] and I therefore determine the premium in the sum of £35,550 (rounding up slightly). Additional sums payable 23. In response to questions from the Tribunal about whether there are any outstanding ground rent or service charges arrears, the Applicant has made a statement which is included in the bundle and which states as follows: i. No ground rent has been demanded or paid to the landlord

5 ii. No other amounts (eg service charges) have been demanded or paid to the landlord.

24. I accept the evidence of the Applicant. In relation to service charges, clause 2(9) of the existing lease requires the Applicant to pay a designated share of the cost of certain specified works. There is no provision for any fixed or estimated service charges on account. There is no evidence that any expenses have been incurred or demanded. There is therefore no evidence that there are any service charges outstanding.

25. In relation to ground rent, clause 1 the existing lease reserves an annual ground rent of £5 “…to be paid by equal yearly instalments in advance on the Twentyfourth day of June in every year without deduction…” and clause 2(1) contains a tenant’s covenant to make those payments. There is no requirement in the lease for ground rent to be demanded. The Applicant’s evidence is that she has never paid ground rent. That means that the ground rent which was due on 24 June 2011 (after the Applicant purchased the leasehold title) up to the ground rent which was due on 24 June 2022 are all still due to the Respondent. I anticipate that the Applicant might say that since the landlord is missing, she has had nowhere to pay that sum. My finding however is not a criticism of the Applicant; it is simply a strict assessment of what is owing for the purposes of [[NAME]] the determination which has been referred to this Tribunal by the court.

26.

I therefore find that the sum of £55 (being 11 yearly payments of £5 ground rent) represents the sum which is due to the Respondent for the purposes of the county court order.

[NAME]: Judge Timothy Cowen Date: 12 September 2022

6 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).

DATED

2022

NEW LEASE OF A FLAT UNDER THE LEASEHOLD REFORM, HOUSING AND [[NAME]] DEVELOPMENT ACT 1993 relating to 148A HERGA ROAD, HARROW [POSTCODE] between [[NAME]] and [[NAME]]

[COMPANY] 608 [ADDRESS] [POSTCODE] 58

2

59 another lease of the Property, or to acquire an interest in other land LR9.1 Tenant's contractual rights to renew this lease, to acquire the reversion or LR9. Rights of acquisition etc. This lease contains a provision that prohibits or restricts dispositions. LR8. Prohibitions or restrictions on disposing of this lease £35,550 (Thirty-Five Thousand Five Hundred and Fifty Pounds). £25,600 (Twenty-Five Thousand Six Hundred Pounds) LR7. Premium The term specified in the definition of "Term" in clause 1.1 of this lease. LR6. Term for which the Property is leased None. LR5.2 This lease is made under, or by reference to, provisions of: Development Act 1993. This lease is granted under section 56 of the Leasehold Reform, Housing and Urban LR5.1 LR5. Prescribed statements etc. See the definition of "Property" in clause 1.1 of this lease. purposes of registration, this clause shall prevail. In the case of a conflict between this clause and the remainder of this lease then, for the LR4. Property None. Other parties [APPELLANT] of 38 [ADDRESS] [POSTCODE] Tenant [[NAME]] of 148A [ADDRESS] [POSTCODE] Landlord LR3. Parties to this lease NGL430650 LR2.2 Other title numbers NGL1987 LR2.1 Landlord’s title number(s) LR2. Title number(s) PERSCRIBED CLAUSESLR1. Date of lease :

3 None. LR9.2 Tenant's covenant to (or offer to) surrender this lease None. LR9.3 Landlord's contractual rights to acquire this lease None. LR10. Restrictive covenants given in this lease by the Landlord in respect of land other than the Property None. LR11. Easements LR11.1 Easements granted by this lease for the benefit of the Property The easements included in the definition of "Incorporated Terms" in clause 1.1 of this lease which are set out in clauses 1-10 of the Schedule in the Previous Lease. LR11.2 Easements granted or reserved by this lease over the Property for the benefit of other property The easements included in the definition of "Incorporated Terms" in clause 1.1 of this lease which are set out in clauses a-d of the Schedule in the Previous Lease. . LR12. Estate rentcharge burdening the Property None. LR13. [[NAME]] for standard form of restriction None. LR14. Declaration of trust where there is more than one person comprising the Tenant 60

4 This lease is dated Parties (1) [APPELLANT] of 148A [ADDRESS] [POSTCODE] (Landlord) (2) [APPELLANT] of 38 [ADDRESS] [POSTCODE] (Tenant) BACKGROUND (A)

(B)

(C)

(D)

Agreed Terms 1. Interpretation The following definitions and rules of interpretation apply in this lease. 1.1 Definitions:

Annual Rent: a peppercorn (nil), if demanded.

61 the Tenant’s rights under LRHUDA 1993 and the Landlord has agreed to do so. The Tenant required the Landlord to grant a new lease of the Property in accordance with lease of the Property. Under Chapter II of Part I of LRHUDA 1993, the Tenant has the right to acquire a new HM Land Registry under title number NGL430650. The residue of the term of the Previous Lease is vested in the Tenant and is registered at HM Land Registry under title number NGL1987. The Landlord is the owner of the freehold reversion to the Property which is registered at lease. [[NAME]] and (2) [[NAME]] and [[NAME]] annexed to this Previous Lease: the lease of the Property dated 12 July 1982 and made between (1) £35,550 (Thirty-Five Thousand Five Hundred and Fifty Pounds) Premium: £25,600 (Twenty-Five Thousand Six Hundred Pounds). LRHUDA 1993: Leasehold Reform, Housing and Urban Development Act 1993. contained in the Incorporated Terms, to be performed and observed by the Landlord. Landlord's Covenants: the obligations in this lease, which include the obligations lease). Incorporated Terms: all of the provisions of the Previous Lease (as varied by this

5

Previous Lease Annual Rent: the annual rent reserved by the Previous Lease as set out in clause 1 of the Previous Lease.

Previous Lease Term: the term for which the Previous Lease was granted as set out in clause 1 of the Previous Lease.

Property: the property known as 148A [ADDRESS] [POSTCODE], more particularly described in the Previous Lease.

Tenant's Covenants: the obligations in this lease, which include the obligations contained in the Incorporated Terms, to be performed and observed by the Tenant.

Term: a term of 189 years from 25 March 1982 1.2 For the purposes of this lease only, if there is an inconsistency between any of the provisions of this lease and the provisions of the Previous Lease, the provisions of this lease shall prevail. 1.3 For the purposes of this lease only, references to the "Landlord" and "Tenant" in the Previous Lease shall be read as references to the Landlord and Tenant in this lease.

2. Grant In consideration of the Premium, the Landlord lets the Property to the Tenant: (a) for the Term; (b) with full title guarantee; (c) on the terms of this lease which include the Incorporated Terms as if they were set out in full in this lease; and (d) with the Tenant paying as rent to the Landlord the Annual Rent.

3. Tenant Covenants The Tenant covenants with the Landlord to comply with the Tenant's Covenants.

4. Landlord Covenants The Landlord covenants with the Tenant to comply with the Landlord's Covenants. 62

6 5. Variations to the Previous Lease For the purposes of this lease only, the provisions of the Previous Lease shall be varied as set out in Schedule 1 and this lease shall be read and construed accordingly.

6. LRHUDA 1993 6.1 This lease is granted under section 56 of LRHUDA 1993. 6.2 No long lease created immediately or derivatively by way of sub-demise under this lease shall confer on the [[NAME]], as against the Landlord, any right under Chapter II of LRHUDA 1993 to acquire a new lease. For this purpose, "long lease" shall be construed in accordance with section 7 of LRHUDA 1993. 6.3 At any time during the period of: (a) 12 months ending with the Previous Lease Term Date; or (b) five years ending with the term date of this lease, the Landlord may apply to the court for an order for possession of the Property on the basis that the Landlord intends to demolish, reconstruct or carry out substantial works of construction on the whole or a substantial part of any premises in which the Property is contained, and that the Landlord could not reasonably do so without obtaining possession of the Property. If the court makes such an order, the Tenant will be entitled to compensation from the Landlord for the loss of the Property. 6.4 The Landlord shall only be personally liable for breaches of any covenant for which it is responsible.

7. Registration of this lease The Tenant shall: (a) apply to register this lease at HM Land Registry promptly following the grant of this lease; (b) ensure that any requisitions raised by HM Land Registry in connection with its [[NAME]] to register this lease at HM Land Registry are responded to promptly and properly; and (c) send the Landlord official copies of its title within one month of completion of the registration. 63

7 8. Section 62 of the Law of Property Act 1925, implied rights and existing appurtenant rights The grant of this lease does not create by implication any easements or other rights for the benefit of the Property or the Tenant and the operation of section 62 of the Law of Property Act 1925 is excluded.

9. Entire agreement 9.1 This lease constitutes the whole agreement between the parties and supersedes all previous discussions, correspondence, negotiations, arrangements, understandings and agreements between them relating to their subject matter. 9.2 Each party acknowledges that in entering into this lease and any documents annexed to it it does not rely on any representation or warranty (whether made innocently or negligently). 9.3 Nothing in this clause shall limit or exclude any liability for fraud.

10. Counterparts Clause This deed may be executed in any number of counterparts, each of which is an original and which together have the same effect as if each party had signed the same document.

This document has been executed as a deed and is delivered and takes effect on the date stated at the beginning of it.

64

8 Schedule 1 Variations to the Previous Lease

1. Substitution of the Annual Rent For the purposes of this lease only, the provisions of the Previous Lease shall be varied as follows: 1.1 This lease shall reserve the Annual Rent instead of, and not in addition to, the Previous Lease Annual Rent. 1.2 The Annual Rent shall be payable on the days and in the manner mentioned in the Previous Lease. 1.3 All of the provisions in the Previous Lease relating to the Previous Lease Annual Rent shall be read and construed as referring to the Annual Rent instead.

2. Substitution of the Term For the purposes of this lease only, the provisions of the Previous Lease shall be varied as follows: 2.1 The Previous Lease Term shall be deleted and replaced by the Term. 2.2 All of the provisions in the Previous Lease relating to the Previous Lease Term shall be read and construed as referring to the Term instead.

65

9 SIGNED as Deed by [[NAME]] )

in the presence of:

Signature of witness: [[NAME]]: Address of witness: [[NAME]]:

SIGNED as Deed by [[NAME]]

)

in the presence of:

66

10 ANNEX A Copy of the Previous Lease

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