Tribunal Caps Valuation Costs in Leasehold Reform Application

OUTCOME: Allowed

FIRST-TIER TRIBUNAL

PROPERTY CHAMBER

(RESIDENTIAL PROPERTY)

Case reference : LON/00BB/OC9/2025/0610

Property : [ADDRESS] [POSTCODE]

Applicant: [redacted]

Respondent: [redacted]

Representative : [NAME] of [NAME] : Section 33 Leasehold Reform, Housing and Urban Development Act 1993

Tribunal members : Judge N [NAME] : 10 [ADDRESS] [POSTCODE]

Date of further directions : 20 June 2025

DECISION

Decision of the Tribunal

The Tribunal determines that the costs payable by Applicant to Respondent pursuant to section 33 of the Leasehold Reform, Housing and Urban Development Act 1993 amount to £300 + VAT per unit, plus an administration fee of £420 per block.

The [NAME]

1. The Applicant is the nominee purchaser of 1-15, 24A-30, 17-37, 39-59 and 61-95 [ADDRESS] [POSTCODE] (“the Property”), following the service of notices under section 13 of the Leasehold Reform, Housing and Urban Development Act 1993 (“the 1993 Act”).

2. The Applicant seeks a determination by the Tribunal of the costs to be paid under section 33(1) of the 1993 Act. The legal costs have been agreed and the only matter in dispute is the reasonableness of the valuation costs.

3. Directions were issued on 11 February 2025, leading up to a paper determination which was originally due to take place on 8 May 2025. On 8 May 2025, the Tribunal noted that the disputed valuation costs which form the subject matter of this [NAME] total over £30,000 and concern five blocks containing 56 flats. The Tribunal considered that further information was needed in order to enable the Tribunal to fairly and justly determine this [NAME].

4. Accordingly, the Tribunal issued Further Directions which included a Direction requiring the Respondent to serve:

(i) A witness statement, with a signed and dated statement of truth:

(a) Stating whether there was a valuation report for each block, for each flat, or for each type of flat;

(b) Explaining the need to have both internal and external surveyors and stating what the function of the internal surveyor was in relation to the external surveyors;

(c) Providing a timeline which specifies the date of instruction for each valuation, the date of each site visit, the turnaround times for issuing each the valuation report and any other context / detail that would be useful in order to understand the steps undertaken by the valuers.

(ii) Examples of up to seven of the valuation reports to demonstrate the nature of the work undertaken and the manner in which it varied from report to report.

(iii) Copies of any correspondence in which details of the valuation costs were shared with the Applicant.

The law

5. Section 33 of the Act is in the following terms:

33.— Costs of enfranchisement.

(1) Where a notice is given under section 13, then (subject to the provisions of this section and sections 28(6), 29(7) and 31(5)) the nominee purchaser shall be liable, to the extent that they have been incurred in pursuance of the notice by the reversioner or by any other relevant landlord, for the reasonable costs of and incidental to any of the following matters, namely—

(a) any investigation reasonably undertaken—

(i) of the question whether any interest in the specified premises or other property is liable to acquisition in pursuance of the initial notice, or

(ii) of any other question arising out of that notice;

(b) deducing, evidencing and verifying the title to any such interest;

(c) [NAME] out and furnishing such abstracts and copies as the nominee purchaser may require;

(d) any valuation of any interest in the specified premises or other property;

(e) any conveyance of any such interest;

but this subsection shall not apply to any costs if on a sale made voluntarily a stipulation that they were to be borne by the purchaser would be void.

(2) For the purposes of subsection (1) any costs incurred by the reversioner or any other relevant landlord in respect of professional services rendered by any person shall only be regarded as reasonable if and to the extent that costs in respect of such services might reasonably be expected to have been incurred by him if the circumstances had been such that he was personally liable for all such costs.

(3) Where by virtue of any provision of this Chapter the initial notice ceases to have effect at any time, then (subject to subsection (4)) the nominee purchaser's liability under this section for costs incurred by any person shall be a liability for costs incurred by him down to that time.

(4) The nominee purchaser shall not be liable for any costs under this section if the initial notice ceases to have effect by virtue of section 23(4) or 30(4).

(5) The nominee purchaser shall not be liable under this section for any costs which a party to any proceedings under this Chapter before the appropriate tribunal incurs in connection with the proceedings.

(6) In this section references to the nominee purchaser include references to any person whose appointment has terminated in accordance with section 15(3) or 16(1); but this section shall have effect in relation to such a person subject to section 15(7).

(7) Where by virtue of this section, or of this section and section 29(6) taken together, two or more persons are liable for any costs, they shall be jointly and severally liable for them.

6. At paragraphs 28-32 to 28-34 of Hague on Leasehold Enfranchisement 7th Ed. It is stated:

The costs covered by the statute are those of and incidental to the following matters:

(a)Any investigation reasonably undertaken of the question whether any interest is liable to be acquired in pursuance of the initial notice or of any other question arising out of the notice. This will include investigating the tenants’ claim to satisfy the residence condition;

(b)Deducing, evidencing and verifying the title to any interest to be acquired;

(c)[NAME] out and furnishing such abstracts and copies as the nominee purchaser may require;

(d)Any valuation of any interest in the specified premises or other property. This will not include the cost of negotiating with the nominee purchaser’s valuer;

(e)Any conveyance of any interest to be acquired.

…

Costs are only to be regarded as reasonably incurred if the reversioner or other landlord would have been expected to incur the costs had he been personally liable for them. This sensible measure is designed to prevent the landlord from inflating his costs merely because the tenants are paying them.

…

In [COMPANY] (Kensington) [COMPANY] v [NAME], a case under s.60 of the 1993 Act, the Upper Tribunal held that solicitor’s costs incurred in instructing a valuer and considering a valuation are incidental to the valuation and as such are (to the extent reasonable) recoverable under s.60.

In [NAME]’s Charity v [COMPANY] a case under s.33, it was stated as a principle that leasehold enfranchisement is specialist work and it is therefore reasonable for a reversioner to use an experienced practitioner rather than a lower grade fee earner, even if the firm is specialist in enfranchisement work.

The Tribunal’s determination

7. The Respondent seeks to claim a fixed valuation fee of £400 plus VAT per unit and an administration fee of £950 per block.

8. Neither party has produced any independent comparable quotations and the Tribunal has therefore applied its general knowledge and experience as an expert Tribunal to the valuation and administrative costs (the Respondent has explained that the “internal surveyor” costs are in fact a “fee for administrative charges undertaken by internal staff”).

9. There are disputes of fact between the parties concerning, for example, the number of different unit types at the Property. In our view, the resolution of the factual disputes is more likely to be potentially relevant to the level the premiums than to the level of valuation costs, which we have assessed with reference to the limited information provided by the Respondent.

10. As the resolution of the factual disputes is unlikely to have any significant impact on this determination, the Tribunal does not consider it proportionate to list the matter, which has already been postponed once, for an oral hearing to enable the Tribunal to make findings of fact.

11. In accordance with the Tribunal’s Directions dated 8 May 2025, the Respondent has disclosed what, in the Tribunal’s opinion, amounts to a Schedule rather than a full Valuation Report for each property.

12. This Schedule provides no detail concerning the location of each unit; the condition of each unit; and the findings on inspection, all of which would be relevant to the valuation. No colour photographs or plans or details of comparable properties have been included. The Respondent has not even stated which flats were inspected. No time sheets and hourly rates have been provided for the internal administrative work and it has not been explained how the different categories of task are broken down.

13. Whilst the Tribunal recognises that the fixed fees of £400 plus VAT per unit are well below the market rate for a full valuation report per flat, on the basis of the limited evidence available, the Tribunal is not satisfied that this fee is reasonable and justifiable for the limited amount of work which the Respondent has established has been undertaken.

14. Having carefully considered all the circumstances, the Tribunal determines that the costs payable by Applicant to Respondent pursuant to section 33 of the Leasehold Reform, Housing and Urban Development Act 1993 are limited to £300 + VAT per unit, plus a £420 administration fee per block.

Name: Judge N Hawkes Date: 20 June 2025

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