12 Bosworth Close, Dudley, West Midlands, DY3 1BJ BIR/00CR/OAF/2021/0003
DECISION
[1]This is an application to determine the sum payable into Court by Lessees to purchase the Freehold interest in 12 Bosworth Close, Dudley, West Midlands, DY3 1BJ, pursuant to Section 27 of the Leasehold Reform Act 1967 ('the Act').[2]The Lessees had been unable to locate the Freeholder to serve Notice to acquire the Freehold and applied to Dudley County Court for a Vesting Order on 29th October 2020 by Claim No: G00DD350. This was granted 15th December 2020 by Deputy District Judge Boynton subject to assessment of the price by the First-tier Tribunal (Property Chamber). The Law[3]There are two interests in the property: Freehold Owned by parties unknown. The lease had been granted by William and Mary Taylor to James Newman for 380 years from 26th April 1712 at a peppercorn rent. Leasehold The demise contained a large parcel of land that became vested in Dudley Metropolitan District Council ('Dudley MBC') under registered title number WM1030. Dudley MBC developed the site for housing and assigned part of the demise comprising the subject house, to P.J. & S.M Cole on 20th October 1982. That leasehold interest is now vested in the Applicants.[4]The Applicants are the current leaseholders and wish to acquire the Freehold. Although their Solicitors and Search Agents carried out thorough enquiries they were unable to locate the heirs or assigns of the original Freeholders and applied to Dudley County Court for a Vesting Order under Section 27 of the Leasehold Reform Act 1967. The application was made 29th October 2020 which is the valuation date for present purposes.[5]The Court issued the Order on 15th December 2020 subject to the price being determined by the First-tier Tribunal (Property Chamber).[6]The Tribunal has considered the facts and assesses the price under section 9(1) of the Act. Facts Found[7]The Tribunal has been unable to inspect the flat due to Government Covid Regulations and relies on the Submission of the Applicants and their Valuer, G.R.Bates FRICS.[8]According to the Valuation Report the property is a two storey mid-terrace house built around 1976. It comprises a living room, kitchen, three bedrooms and bathroom with w.c. The house has been improved by the Lessees since originally built. The house is similar to others on the estate but the site is fully developed and there is no garage or off-road parking. Issues[9]The Court Order requires the Tribunal to determine the price of the Freehold interest. The ground rent is a peppercorn per annum and not in issue. The price payable under section 9(1) of the Act[10]The Applicants' submissions on each element of the valuation and the Tribunal determinations are as follows:[11]Unexpired Term Applicant 71.5 years Tribunal The Tribunal takes the term from the Land Registry entry and agrees the unexpired term at 71.5 years at the valuation date.[12]Value of Term Ground Rent Applicant Nil, peppercorn ground rent. Tribunal The Tribunal agrees.[13]Entirety Value of Freehold Applicant £134,500. Mr Bates arrived at the figure having considered the reported prices achieved by four other houses in the locality: 21 Marlborough Rd. August 2020 £150,000 54 Hockley Road August 2020 £146,000 86 Parkes Hall Rd. May 2020 £142,500 31 Parkes Hall Rd. September 2019 £140,000 The comparables all had garages or parking whereas the subject house had neither and to compensate for the difference and the fact that it is mid-teraced, Mr Bates deducted 7% from the average sale price and rounded to £134,500. Tribunal The 'entirety value' is a hypothetical value based on the maximum sale value of a house on the plot, not necessarily the existing house, assuming the plot to be fully developed to its highest potential. It is only relevant as a means of assessing the notional ground rent of the plot for the 50 year lease extension envisaged by section 15 of the Act. Having considered the evidence the Tribunal agrees the value at £134,500.[14]Site Value as Percentage of Entirety Value Applicant 30% as the subject house is mid-terraced. Tribunal The Tribunal agrees.[15]Years Purchase Applicant 5.25% for analysis of both the notional site value to a ground rent and capitalisation of the ground rent for the notional 50 year lease extension. Tribunal The Tribunal agrees.[16]'Standing House' Value of Freehold Applicant £134,500. Mr Bates considers the plot fully developed and accordingly the Standing House Value to be the same as the Entirety Value. Tribunal The 'standing house' value is the market value of the house currently built on the site, excluding the value of any tenant improvements, assuming the Freehold is sold with vacant possession. The Tribunal agrees the plot is already fully developed and determines the Standing House value at £134,500.[17]Tribunal Valuation Based on these inputs, the Tribunal determines the value as: Term 1 £ 0 Term 2 Entirety Value £ 134,500 x plot ratio 0.3 Plot Value £ 40,350 5.25% return 0.0525 Equivalent rental value per s.15 of the Act £ 2,118 Years Purchase 50 years 5.25% 17.5728 Present Value 71.5 years 5.25% 0.025770 £ 959 Reversion Standing House Value £ 134,500 Present Value 121.5 years 5.25% 0.00199 £ 267 £ 1,226 Freehold Value say £ 1,220[18]Tribunal Determination The Tribunal determines the price of the Freehold interest at £1,220 (One Thousand Two Hundred and Twenty Pounds). I.D. Humphries B.Sc.(Est.Man.) FRICS Chairman Date: 5 March 2021 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.