Valuation for Missing Landlord Under Leasehold Reform Act

OUTCOME: Allowed

Case Reference : BIR/00CR/OAF/2025/0002

Property

: [ADDRESS], Woodsetton, Dudley, West Midlands, [POSTCODE]

Applicant: [redacted]

: [APPELLANT].

Respondent: [redacted]

Representative

: None

Type of Application : To determine the sum payable into Court by lessees to purchase

a freehold interest pursuant to Section 27 Leasehold Reform Act

1967 by Order of Dudley County Court of 4 December 2024.

Claim No.L00DD647

Tribunal Members : [NAME]. [NAME] [NAME].(Est.Man.) FRICS

V. Ward FRICS Regional Valuer

Date and Venue of : None. Determined by paper submission Hearing

Date of Decision : 18 March 2025

____________________________________________________________

DECISION

© CROWN COPYRIGHT 2025

FIRST - TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Introduction 1 This is an application to determine the sum payable into Court by a [NAME] to purchase the

freehold interest in [ADDRESS], Woodsetton, Dudley, West Midlands, [POSTCODE], where the landlord cannot be found, pursuant to Section 27 Leasehold Reform Act 1967 ('the Act').

2 The [NAME] has been unable to locate the [NAME] to serve Notice to acquire the freehold and applied to Dudley County Court for a Vesting Order on 11 November 2024. This was granted on 4 December 2024 by Deputy District Judge Holden subject to assessment of the price by the First-tier Tribunal (Property Chamber). County Court case reference L00DD647.

The Law 3 There are two known interests in the property:

Freehold Owned by parties unknown. The lease had been granted by [RESPONDENT] and [NAME] to [RESPONDENT] for 380 years from 26th April 1712 at peppercorn

ground rent.

Leasehold The leasehold interest was registered to the Applicant on 26 November 1987.

4 The Application for a Vesting Order was made under Section 27 of the Leasehold Reform Act 1967 on 18 November 2024 which is the valuation date for present purposes.

5 The Tribunal has considered the facts and assesses the price under section 9(1) of the Act.

Facts Found 6 The Tribunal has not inspected the property and relies on the Submission of [NAME]. of [NAME], Birmingham.

7 The property comprises a two storey, three bedroom, detached house on a modern housing estate near Dudley built around 1988. The accommodation comprises an entrance hall with cloakroom, through lounge, kitchen and store on the ground floor with three bedrooms and a bathroom on the first floor. It has an attached single garage. The property has an open plan front garden and enclosed back garden.

8 It is brick and tile construction with upvc double glazing and gas-fired central heating and in good condition.

Issue [ADDRESS] requires the Tribunal to determine the appropriate sum to be paid into Court for the price of the Freehold interest.

Applicants' Submission and Tribunal Determination on Valuation Inputs

10 Basis of Valuation

Applicants

Mr [NAME] submits that the valuation should be undertaken in accordance with section 9(1) of the Leasehold Reform Act 1967.

Tribunal

The Tribunal agrees.

11 Unexpired Term

Applicants

67.43 years from the valuation date, 18 November 2024.

Tribunal

The Tribunal accepts the term from the Land Registry entry and agrees the unexpired term at the valuation date.

12 Value of Term Ground Rent

Applicant

Nil. The ground rent recorded by H.M. Land Registry is one peppercorn per annum.

Tribunal

The Tribunal agrees.

13 Freehold Entirety Value

'Entirety value' is the notional market value of the best house that could reasonably be expected to have been built on the plot at the valuation date, assuming the plot were fully developed.

Applicant

Mr [APPELLANT] provides the following records of property sales in the area for comparison:

Address

Description

Date Price £

17 [ADDRESS], [POSTCODE] Detached house. 3 bedrooms, 3

[NAME] 320,000

receptions, no garage as converted to a reception.

24 [ADDRESS], [POSTCODE] Semi-detached house. 2 bedrooms, [NAME] 209,950

1 reception, garage.

35 [ADDRESS], [POSTCODE] Detached house. 3 bedrooms,

[NAME] 295,000

2 receptions, garage.

21 [ADDRESS], [POSTCODE] Detached house. 3 bedrooms,

22.7.24 295,000

2 receptions, 2 bathrooms, garage.

16 [ADDRESS], [POSTCODE] Detached house.

14.6.24 274,000

32 Bosworth Cl., [POSTCODE] Detached bungalow.

18.8.23 263,000

7 Reynards Cl., [POSTCODE] Detached bungalow.

14.7.23 320,000

Of its own volition, the Tribunal also located the following sales in the locality recorded on the internet. No criticism is made of Mr [NAME] for not drawing them to the Tribunal's attention as they were sold after the valuation date of [ADDRESS] and probably not recorded on the internet by the date of Mr [NAME], but they are listed on this Decision as further evidence of market conditions at the time although carrying less weight as evidence than prior sales recorded at the valuation date.

4 [ADDRESS], [POSTCODE] Detached house. 3 bedrooms,

21.11.24 290,000

garage.

17 Bosworth Cl, [POSTCODE] Detached house. 3 bedrooms,

12.12.24 315,000

garage.

Mr [NAME] submitted that [ADDRESS] presented the best evidence as it was a similar house in the area, sold only five months before the valuation date. No.[ADDRESS] had the benefit of an extra bathroom that justified increasing its value to £305,000. In Mr [NAME] opinion, if the subject plot were fully developed, the maximum value of a hypothetical house that could reasonably have been built on the plot in November 2024 , i.e. its 'entirety value', would have been £305,000.

Tribunal

The Tribunal considered this together with the two additional sales of similar houses recorded in the area. They were all similar in terms of description, accommodation and locality, [ADDRESS] being sold for slightly more at £315,000 and [ADDRESS] slightly less at £290,000. However, there will always be slight variations from the arithmetic mean due to negotiations in the market but taking the sales of all the similar houses into account, the Tribunal agrees with Mr [NAME] opinion of an Entirety Value of £305,000 at the valuation date.

14 Site Value as Percentage of Entirety Value

Applicant

Mr [APPELLANT] contends an Entirety Value representing 34% of the value of the plot.

Tribunal

Applying its own general expertise, the Tribunal finds this figure to be low and finds for a plot percentage of 37%.

15 Years Purchase

Applicant

As there is a peppercorn ground rent, the value of the term income is nil and there would be no point determining the capitalisation rate.

Mr [NAME] submits for a deferment rate of 5.25% based on case law (see below) and other valuations of the First-tier Tribunal (Property Chamber) in recent years.

Tribunal

The Tribunal agrees, although previous Tribunal decisions are not binding on the Decision.

Cases cited by Mr [NAME]:

1 Marshall v [COMPANY]. [BIR/00CN/OAF/2016/0009]

2 [COMPANY] v [NAME] & Others [2017] UKUT 233 (LC)

16 Freehold Standing House Value

Applicant

£305,000. Mr [APPELLANT] considers the plot to be fully developed and deems the Standing House Value to be the same as the Entirety Value.

Tribunal

The 'standing house value' is the market value of the house built on the site, excluding any tenant improvements and that the Freehold is sold with vacant possession.

The Tribunal agrees that in this case, the Entirety Value and Standing House Value can be treated as the same, and determines at £305,000.

17 Sch.10 Local Government & Housing Act 1989

Under Schedule 10 to the Local Government & Housing Act 1989, Valuers sometimes make allowance for the prospect of occupiers remaining in occupation on expiry of the term which in this case would be April 2092.

Applicant

Mr [APPELLANT] makes no reduction to reflect the possibility of a [NAME] remaining in occupation on expiry of the lease under Schedule 10 to the Local Government and Housing Act 1989.

Tribunal

The lease expires in 67.43 years' time which the Tribunal considers too remote to require a Schedule 10 reduction. Each case is considered on its merits but 67 years is considered too far in the future and disregarded.

18 Tribunal Valuation

Based on these inputs, the Tribunal determines the value of the freehold interest as:

Term 1

£ 0

Term 2

Entirety Value

£305,000

x plot ratio

0.37

Plot Value

£ 112,850

5.25% return

0.0525

Equivalent rental value per s.15 of the Act

£ 5,925

Years Purchase 50 years 5.25%

17.5728

Present Value 67.43 years 5.25%

0.0317

£3,300

Reversion

Standing House Value

£ 305,000

Present Value 117.43 years 5.25%

0.00246

£ 750

Freehold Value

£4,050

19 Other sums due to the [NAME]

[ADDRESS] determines that no other sums are due to the [NAME].

20 Tribunal Determination

The Tribunal determines the price of the freehold interest in accordance with section 9(1) of the Leasehold Reform Act 1967 to be £4,050 (Four Thousand and Fifty Pounds).

[NAME] [NAME].(Est.Man.) FRICS

Chairman

Date

Appeal to the Upper Tribunal

Any appeal against this decision must be made to the Upper Tribunal (Lands Chamber). Prior to making such an appeal the party appealing must apply, in writing, to this Tribunal for permission to appeal within 28 days of the date of issue of this decision (or, if applicable, within 28 days of any decision on a review or application to set aside) identifying the decision to which the appeal relates, stating the grounds on which that party intends to rely in the appeal and the result sought by the party making the application.