Tenant Granted Statutory Lease Extension Due to Missing Landlord

OUTCOME: Allowed

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : LON/00AQ/OLR/2024/0197

Property : 188 [ADDRESS], [POSTCODE]

Applicant: [redacted]

[NAME] :

[NAME]

Respondent: [redacted]

[NAME] : None Type of [NAME] : Section 39 of the Leasehold Reform, Housing and Urban Development Act 1993 (Missing Landlord) Tribunal members : [NAME] (Valuer Chair) Venue : 10 [ADDRESS] [POSTCODE] Date of decision : 11 June 2024 Corrected 13 June 2024

DECISION

Summary of the tribunal’s decision (1) The appropriate premium payable for the collective enfranchisement is £32,392.00. (thirty two thousand three hundred and ninety two)

2

Background 1. This is an [NAME] made pursuant to section 39 of the Leasehold Reform, Housing and Urban Development Act 1993 (“the Act”) for a determination of the premium to be paid for a statutory lease extension due to a missing landlord of 188 [ADDRESS] [POSTCODE].

2. By an [NAME] to the court dated 2 November 2023 the applicant sought an order vesting order under s50(1) as the [NAME] could not be traced.

3. By an order dated 10 November 2023 the Watford County Court made a vesting order transferring the matter to the First Tier Tribunal.

4. The tribunal issued directions on 19 March 2024. A bundle has been submitted to the tribunal including a valuation report and draft lease. The issues 5. The tribunal has been provided with a valuation report prepared by Mr [NAME] BA MRICS: (a) The subject property is a a two-storey end-terrace property split into 2 self-contained flats with the subject property being on the ground floor. There is a single front door and both flats have access to the rear garden. The flat is conventionally laid out with accommodation consisting of entrance hall, bedroom, bathroom, living room with separate kitchen area. The flat has the benefit of main services has gas-fired central heating. The flat is described as being in poor condition. (b) The valuation date: 9 November 2023 (c) Details of the tenants’ leasehold interest: (i) Date of lease: 28 March 1986 (ii) Terms: 99 years from 28 February 1986 (iii) Ground rent: £50 per annum for each flat rising by £50 at 33 yearly intervals (iv) Unexpired term at valuation dates: 61.3 years; (d) Mr [NAME] has used a Capitalisation rate of 7%; and a Deferment rate of 5%.

Matters to be determined 6. The following matters are to be determined by the tribunal:

3 (a) Capitalisation rate; (b) Relativity; and (c) The premium payable. The hearing 7. The case was decided on the papers on 11 June 2024. The applicants were represented by [NAME] solicitors. The respondents were untraced and no representations were received on their behalf.

8. Neither party asked the tribunal to inspect the property and the tribunal did not consider it necessary to carry out a physical inspection to make its determination.

9. The applicant relied upon the expert report and valuation of Mr [NAME] dated 10 April 2024. No valuation was submitted on behalf of the respondent. Deferment and capitalisation rates 10. The tribunal agrees that a capitalisation rate of 7% and a deferment rate of 5% are appropriate. Relativity 11. Mr [NAME] has used a relativity of 79.08% although the source is not stated.

12. In this case the tribunal prefers to use the Zucconi rate of 79.15% based on a blending of the Savills and [NAME] unenfranchisable graphs.

13. Marriage value is to be divided evenly as the leases have less than 80 years unexpired. Freehold value 14. Mr [NAME] has provided details of a number of comparable flats. 15. [ADDRESS] is a one-bedroom ground floor garden flat sold for £220,000 in October 2023. The flat has a 148 year lease and is in better condition. 16. [ADDRESS] is a one-bedroom first floor flat sold for £253,000 in November 2023. The flat has a private garden and is larger. It is in similar condition and has a share of the freehold.

4 17. [ADDRESS] is a one-bedroom 1st floor flat sold for £260,000 in July 2023. The flat is slightly smaller, has a share of the freehold and shared use of the garden. It has a refurbished kitchen and is in better condition. 18. [ADDRESS] is a one-bedroom first floor which is larger than the subject and has shared use of the garden and a share of the freehold and sold £250,000 in March 2023. 19. [ADDRESS] is a one bedroom first floor flat which is larger and with its own garden. It is recently refurbished and has a long lease. It sold “recently” for £253,000.

20. Based on this evidence Mr [NAME] places a value on the ground floor flat of £250,000 assuming a long lease and a current value of £197,700. The tribunal’s determination 21. The tribunal has considered the evidence submitted and also used its own expert knowledge. The tribunal agrees that the value placed on the flat by Mr [NAME] is appropriate. The long leasehold figure of £250,000 represents 99% of the freehold value which comes to £252,525 based on the market convention. Hope value 22. The tribunal considers that the property is fully developed and there is no hope value to be added in this case. Valuation 23. The tribunal assesses the premium to be paid at £32,392 as set out in the attached valuation. Draft Lease 24. The terms of the draft lease are approved. Name: Mr [NAME]: 11 June 2024 and 13 June 2024

5 Address Tribunal Valuation Valuation Date 09 November 2023 Existing lease Expiry Date 27 February 2085 Years unexpired 61.30 Length of new lease 151.30 Existing Ground Rent £100.00 Basis of review Date of 1st review 28 February 2052 Years to 1st review 28.30 Length of period 33 Rent at 1st review £150.00 Capitalisation Rate 7.00% Deferment Rate 5.00% Long Lease Figure £250,000 F/H to Long lease change 99% Freehold figure £252,525 Real World Short Lease Value No Act Discount Relativity Rate 79.15% Current Lease Value £199,874 Cap Rate P/V Multiplier Term Value Term 1 £100.00 28.30 7.00% 12.1808 1 12.1808 £1,218 1st Review £150 33.00 7.00% 12.7538 0.15 1.8792 £282 £1,500 REVERSION VALUE Capital Value Years to Reversion Deferment Rate P/V Reversion Value £252,525 61.30 0.05 0.0502 £12,686 £14,186 NEW FREEHOLD VALUE Capital Value Years to Reversion Deferment Rate P/V Reversion Value £252,525 151.30 0.05 0.0006 £157 MARRIAGE VALUE CALCULATION Value of [NAME] £157 Value of Leaseholders New Interest £250,000 £250,157 less Value of [NAME] £14,186 Value of Leaseholders Current Interest £199,874 £214,060 Difference £36,097 50% of Difference £18,049 CALCULATION OF PAYMENT BY [NAME] £14,186 [NAME] £157 Share of Marriage Value £18,049 £32,392 Total Term Value [ADDRESS] Infomation EXISTING FREEHOLD VALUE TERM VALUE

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).