Mr N. MartindaleChokkar & Co. (Solicitors) for the ApplicantDate 4 June 2025Property: Stafford Avenue Slough SL2 1AR Sukhmej Singh PurewalType of application: Reform Act 1967 (missing landlord)
DECISION
The premium to be paid by the applicants for the freehold interest in the Property is £7,196 (Seven thousand one hundred and ninety six pounds). Introduction[1]This concerns an application made under Section 27 of the Leasehold Reform Act 1967 (“the Act”) for a transfer of the freehold of the Property. This determination is of the premium to be paid by the applicant leaseholders to the freeholder of the Property. The relevant legal provisions are set out in the Appendix to this decision.[2]The applicants, are the long leaseholders of the Property. The Property was a house constructed originally in the 1930’s. it was later converted in the 1980’s into two flats; No.153 on the ground floor, No.153A on the first floor. The conversion from house into two flats, appears to have commenced but very little work was actually completed save for the creation of two separate external access doors, one to each flat.[3]Each part of the former house was let on separate but essentially identical lease terms. Both leases are now in the same ownership of the applicants. Neither appears to be sub-let.[4]A lease of each part of the former house was granted in 1989 for 99 years. Ground rents on each were: £50pa for years 1-33, £100pa for years 33-66, £200 pa for years 66-99. The two Leasehold titles to the Property are registered at HM Land Registry under BK277305 (ground floor No.153), under BK277982 (first floor No.153a).[5]Solicitors to the applicants provided (at page 2 of The Report), the following explanation of their chosen approach taken under the 1967 Leasehold Reform Act rather than under the 1993 Leasehold Reform Housing and Urban Development Act 1993; to the Valuer preparing the Report as follows: “”It is reasonable to call a building purpose built as two maisonettes which externally looks like a single residence, a “house”. That was the decision in Malpas v St Ermin’s Property Ltd. [1992] 1 EGLR 109. There the Court of Appeal held, that a building purpose built as two maisonettes, with separate doors was a “house”. Externally the building looked very much like a terraced house, albeit that it had two front doors. This shows that there can be buildings as flats which it is reasonable to call a house.”[6]There is no known current registered freehold proprietor of the Property under HMLR title BK169535, so no respondent.[7]By order made of District Judge Lucas, issued 4 January 2024 in the County Court at Slough. The order provided at “1. The claimant shall make an application to the Leasehold Valuation Tribunal for determination of the purchase prices”. All other matters being reserved for the Court to determine subsequently. The Tribunal determines the premium under S.9 of the Act. The Court having reserved approval of the final form of transfer, other costs, rents and other matters to itself.[8]Directions in standard format were issued by Laura Lawless of the Tribunal. No copy was found in the bundle however, contrary to standard Direction.[9]The Tribunal now determines the premium payable at the antecedent valuation date, the date of filing the claim to transfer the freehold, being 27 February 2023, only. It remits determination of the remainder of the application back to the County Court for it to consider and determine: The final form of transfer TR1; the deduction, if any, of the applicant’s costs in this application from, and the addition of any to, that total premium sum. Statutory basis of valuation[10]Section 9 to the Act provides that the price to be paid by the purchaser for of the freehold interest shall be the aggregate of the value of the freeholder's interest and compensation for any other loss. No payment is made for the freeholder’s share of any marriage value arising where the enfranchisement arose from one of the exceptions set out under S.1A of the Act. In this case it is represented by the Valuer at the bottom of the valuation sheet.[11]It is taken that the transfer qualifies as an enfranchisement made under Section 9(1A) of the Act because the rateable value of the Property as at April 1990 was not more than £500. Therefore the provisions of Section 9A which take account of compensation by the tenant for the landlord’s loss of marriage value, do not apply to this transfer.[12]The value of the freehold interest is the amount which, at the valuation date, that interest might be expected to realise if sold in the open market subject to the tenancy by a willing seller (with the nominee purchaser, or a tenant of premises within the specified premises or an owner of an interest in the premises, not buying or seeking to buy) on the assumption that the tenant has no rights under the Act either to acquire the freehold interest or to acquire a new lease. Applicants’ Case[13]The applicant has now provided a valuation report dated 31 July 2024 by Colin George Hurst MRICS (the “Valuation Report”). The report contains a formal Statement of Truth confirming that in so far as the facts stated in the report are within his own knowledge, that he believes them to be true and includes a statement of compliance confirming that they understand their duty to this Tribunal.[14]Having considered the contents of the Valuation Report and the opinions expressed in that report the Tribunal is satisfied that the method adopted is appropriate to determine the enfranchisement price for the Property. The Tribunal accepts the approach taken to value the Property as a single house. It also notes that care has been taken by the Valuer to check his conclusion as to the value of the Property as a single house, by further reference to values of flats either created from similar conversions of former houses or purpose built from blocks of purpose built maisonettes, on the surrounding estate roads.[15]The Tribunal accepts the description of the Property and its location as stated in the Valuation Report. The antecedent valuation date is 27 February 2023, the date of filing the claim at Court.[16]Photographs of the exterior and interior of the Property were included in the Valuation Report. The Tribunal did not consider it necessary or proportionate to carry out an inspection of the Property. Valuation[17]According to the Valuation Report, the Property though converted in the later 1980’s is to be valued as a single semi-detached dwelling house said to have been built in the 1950’s despite the conversion into a flat on each of the two levels. The Property is of traditional construction. Conversion of the ground floor included a rear back addition ground floor only to accommodate the bathroom.[18]It is situated in a residential estate originally of traditionally constructed houses, some since divided into self contained flats, others purpose built flats/maisonettes, in Slough. The Property site area is about 310m2, while the Gross External Area of the building footprint said to be 61m2: The developed proportion is said to be some 20%.[19]The Property was originally arranged as the left hand house of a pair of semi-detached houses fronting Stafford Avenue. The ground floor Gross Internal Area (EPC/measured) is 48/49m2; the first floor 30/39.5m2 respectively. The differential floor area mainly being due to the ground floor back addition. The first floor flat, floor area is near to the minimum expected by the market for a one bedroom flat.[20]External walls are finished to brick/ render elevations under a pitched and hipped roof structure, finished in concrete single lap tiles. The windows are double glazed. There are small front and rear gardens.[21]Internally the ground floor flat has 2 rooms, kitchen, bathroom/wc; first floor 2 rooms, kitchen, bathroom/wc. As a house it would have had 5 rooms, kitchen, bathroom. No reference is made to improvements by tenants, since conversion by the landlord.[22]At the valuation date 27 February 2023 (AVD) the unexpired residue of each 99 year lease from 1 January 1989 ,is reported as 64.84 years.[23]The premium is calculated in 3 parts: 1. Value of the income stream at the pre-set rents from both parts of the Property for the remaining term of 64.84 years. 2. Value of the income stream at a modern ground rent for the 50 year extension of the whole beyond that period. 3. Value of capital value of the freehold, with vacant possession but, deferred for 114.84 years.[24]The Valuer confirms that he has adopted the capitalisation rate of 6% for the first and second terms. The rents whilst pre-set rising significantly for the last period of 33 years of the first term, rise appreciably for the next 50 year lease extension period. The same rate of 6% is adopted for devaluation of the site capital value for a more modern equivalent house, as is applied for this lease extension.[25]The Valuer confirms that he has adopted the Sportelli deferment rate of 4.75% when applied to the delayed enjoyment of the full capital value of the freehold with vacant possession on conclusion of the actual and assumed 50 year lease extension beyond.[26]In assessing the “modern ground” for the assumed 50 year lease extension beyond the existing term the Valuer confirms the absence of market based ground rents in the locality as is often the case. Instead he adopts a 45% portion of the full capital value of the whole freehold with vacant possession for a modern equivalent house site value. This provides the basis for a “Modern House Value”.[27]The Report refers to the cost of building a modern equivalent house at £257,000 marginally more expensive than the constructing the original house at £264,000. The Valuer places a value of £467,500 as the capital value of a likely new home which he might expect now and £425,000 as the value of the standing house. The former is based on planning permission for a slightly better quality home with a price uplift taken at 10% on the standing house.[28]The new home gross development value less costs leaves a surplus of £210,500 for developers profit and site value. He takes the former at a modest 12.5% on gross development value, assuming that the small developer of such would seek some additional form of return from the construction costs as well. The 45% of GDV, less the 12,% of GDV leaves 32.5% of GDV as a remainder for Site value £151,937. Expecting a return at 6% on this gives a modern ground rent of £9116. This figure is used in valuing the 50 year term.[29]The Report lists details of some 18No. sales of comparables. Of these 7No. are of houses; 11 of flats (some converted from former houses but mostly purpose built in the 1950’s, with external staircases). The Report references each set of comparables slightly differently: The freehold houses, as the most useful direct sales for the purpose of this 1967 Act valuation but, also takes care to check the result by reference to the leasehold flats mostly with virtual freehold 999 year leases.[30]The Valuer’s assessment of the market value is based on evidence of sales of the freeholds of local, comparable dwellings in and around the location of the Property at and around an AVD of February 2023. The Valuer adjusts the basic sale values of the comparables: for time at 3% pa lower before, rising after the AVD based on approximate HMLR market trend data. The figures below are for the unadjusted sale prices.[31]No.1 GF Flat: 45 Wiltshire Avenue SL2 1BB sold January 2024 at £254,000. 999 year lease from 1950. Part of mid terrace house. 3 rooms, bathroom, kitchen. 47m2 GIA.[32]No.2 House: 20 Northcroft SL2 1HS sold October 2023 at £430,000 freehold. Semi detached house on a nearby better housing estate. 5 rooms bathroom kitchen, smaller 73m2 GIA but with garage.[33]No.3 GF Flat: 78 Cumberland Avenue SL2 1AN sold August 2023 at £282,000. 999 year lease from 1950. Maisonette in a semi-detached block. 4 rooms bathroom, kitchen 53m2 GIA.[34]No.4 House: 24 Northcroft SL2 1HS sold June 2023 at £505,000 freehold. Semi-detached house on a nearby better housing estate. 5 rooms bathroom kitchen, 114m2 bigger but a busier spot.[35]No.5 House: 24 Northborough Road SL2 1PS sold August 2023 at £420,000 freehold. End terrace house on a nearby housing estate 4 rooms bathroom kitchen conservatory 91m2 bigger but a busier spot.[36]No.6 House: 51 Cantebury Avenue SL2 1EE sold July 2023 at £425,000 freehold. Semi detached house. 4 rooms bathrom kitchen 65m2 smaller than Property but, similar location. A key comparable.[37]No.7 GF Flat: 14 Lanscaster Avenue SL2 1AX sold December 2023 at £270,000 leasehold 999 years from 1950. 3 rooms bathroom kitchen conservatory 60m2. Bigger than GF at Property.[38]No.8 FF Flat: 136 Stafford Avenue SL2 1AT sold November 2023 at £169,000 leasehold 999 years from 1950. 3 rooms bathroom kitchen 44m2 in a former mid terrace house. A key comparable for the check assessment of flat values.[39]No.9 House: 23 Wiltshire Avenue SL2 1BB sold May 2023 at £430,000 freehold. 98m2. End terrace house of high spec. A key comparable.[40]No.10 FF Flat: 3 Cornwall Avenue SL2 1AY sold April 2023 at £252,000 leasehold. 999 years from 1950. 56m2. Part of a semi- detached building. Same estate, larger gardens with a double garage off street parking.[41]No.11 House: 158 Canterbury Avenue SL2 1BE sold March 2023 at £420,000 freehold. 67m2. End of terrace with off street parking and garage smaller house than the Property and on different estate. Indicator of minimum value for the Property.[42]No.12 House: 12 Westcroft SL2 1HN sold March 2023 at £430,000 freehold. 83m2. Semi detached house with off street parking. Smaller and on a different housing estate.[43]No.13 GF Flat: 6 Lancaster Avenue SL2 1AX sold February 2023 at £268,000 125 year from 2015. 47m2. Part of Semi detached house with off street parking. 2 rooms kitchen bathroom. No time adjustment needed.[44]No.14 FF Flat: 127 Stafford Avenue SL2 1AP sold February 2023 at £170,000 999 years from 1950. 40m2. Part of End terrace building. No time adjustment needed.[45]No.15 GF Flat: 1 Cornwall Avenue SL2 1AY sold November 2022 at £253,000 999 years from 1950. 51m2. Part of Semi detached building with off street parking. On same estate with larger plot[46]No.16 GF Flat: 145 Cantebury Avenue SL2 1BH sold November 2022 at £240,000 999 years from 1950. 48m2. On a different estate.[47]No.17 GF Flat: 53 Wiltshire Avenue SL2 1BB sold August 2022 at £245,000 999 years from 1950. 46m2. End terrace building.[48]No.18 FF Flat: 7 Cornwall Avenue SL2 1AY sold August 2022 at £255,000 999 years from 1950. 54m2. Garage and off street parking higher value but larger than FF at Property.[49]These comparables can be divided between the primary ones, of houses for the Property valuation and, secondary ones, of flats mostly purpose built maisonettes both first and ground floor and conversions including at the Property. Ground floor flats are consistently larger than the upper floors. The flats are a guide to the value of the whole as flats but only as a secondary check.[50]From this considerable wealth of comparable materials the Valuer adjusts the sale prices for time and market movements between the actual sales and the AVD. He applies 3% pa market price increase since 2020 to the 2023 AVD and a deduction at the same market trend rate for post AVD sales. The Valuer concludes that at the AVD, the freehold capital value, of the Property unencumbered, was £425,000. The Tribunal also concurs the approach taken by the Valuer, leading up to the conclusion at this figure[51]As a check, the Valuer places £251,800 on the ground floor flat and £170,000 on the first floor without off street parking, and an internal (space consuming) staircase. As flats, the Valuer places a total value of £421,800. The value of the Property as a single house rather than as two purpose built or converted flats is therefore comparable. The Tribunal concurs with the Valuer’s view that in some areas the value of the whole Property as a single unit, can sometimes counter-intuitively exceed the sum of the values of the parts, as here. It seems to the Tribunal that the purpose built maisonettes on the estate on the 999 year leases from the 1950’s may well have been more spacious and better specified than later smaller conversion as happened at the Property.[52]The value of the landlord's interest in the Property then, is represented first by the capitalised value of the ground rent receivable under their lease. That income stream is typically capitalised by the Valuer at 6%, which the Tribunal accepts.[53]The second element of the landlord’s interest is then represented by the hypothetical grant of a 50 year extension at the end of the existing 96 odd year term, but at a modern ground rent. The Tribunal accepts the Valuers devaluation and term rate of 6%, as for the initial term income.[54]The third element, the value of the freehold vacant possession of the standing house at £425,000 is deferred at the Sportelli 4.7%%. Again the Tribunal concurs with the freehold and the devaluation rate adopted.[55]The Tribunal is content with the Valuer’s final calculation as provided. The Tribunal has not therefore issued its own valuation.[56]The premium to be paid by the applicants for the freehold interest in the Property is £7,196 (Seven thousand one hundred and ninety six pounds). Name: Neil Martindale Date: 4 June 2025Appendix Leasehold Reform Act 1967 Section 27 Enfranchisement where landlord cannot be found(1) Where a tenant of a house having a right under this Part of this Act to acquire the freehold is prevented from giving notice of his desire to have the freehold because the person to be served with the notice cannot be found, or his identity cannot be ascertained, then on an application made by the tenant the court may, subject to and in accordance with the provisions of this section, make such order as the court thinks fit with a view to the house and premises being vested in him, his executors, administrators or assigns for the like estate and on the like terms (so far as the circumstances permit) as if he had at the date of his application to the court given notice of his desire to have the freehold.(2) Before making any such order the court may require the applicant to take such further steps by way of advertisement or otherwise as the court thinks proper for the purpose of tracing the landlord; and if after an application is made to the court and before the house and premises are vested in pursuance of the application the landlord is traced, then no further proceedings shall be taken with a view to the house and premises being so vested, but subject to subsection (7) below— (a) the rights and obligations of all parties shall be determined as if the applicant had, at the date of the application, duly given notice of his desire to have the freehold; and (b) the court may give such directions as the court thinks fit as to the steps to be taken for giving effect to those rights and obligations, including directions modifying or dispensing with any of the requirements of this Act or of regulations made under this Act.(3) Where a house and premises are to be vested in a person in pursuance of an application under this section, then on his paying into court the appropriate sum there shall be executed by such person as the court may designate a conveyance in a form approved by the court and containing such provisions as may be so approved for the purpose of giving effect so far as possible to the requirements of section 10 above; and that conveyance shall be effective to vest in the person to whom the conveyance is made the property expressed to be conveyed, subject as and in the manner in which it is expressed to be conveyed.(4) For the purpose of any conveyance to be executed in accordance with subsection (3) above, any question as to the property to be conveyed and the rights with or subject to which it is to be conveyed shall be determined by the court, but it shall be assumed (unless the contrary is shown) that the landlord has no interest in property other than the property to be conveyed and, for the purpose of excepting them from the conveyance, any underlying minerals.(5) The appropriate sum which, in accordance with subsection (3) above, is to be paid into court is the aggregate of— (a) such amount as may be determined by (or on appeal from) the appropriate tribunal to be the price payable in accordance with section 9 above; and (b) the amount or estimated amount (as so determined) of any pecuniary rent payable for the house and premises up to the date of the conveyance which remains unpaid.(6) Where a house and premises are vested in a person in accordance with this section, the payment into court of the appropriate sum shall be taken to have satisfied any claims against the tenant, his executors, administrators or assigns in respect of the price payable under this Part of this Act for the acquisition of the freehold in the house and premises. Section 9 Purchase price and costs of enfranchisement (1) Subject to subsection (2) below, the price payable for a house and premises on a conveyance under section 8 above shall be the amount which at the relevant time the house and premises, if sold in the open market by a willing seller, (with the tenant and members of his family . . . not buying or seeking to buy) might be expected to realise on the following assumptions:— (a) on the assumption that the vendor was selling for an estate in fee simple, subject to the tenancy but on the assumption that this Part of this Act conferred no right to acquire the freehold, and if the tenancy has not been extended under this Part of this Act, on the assumption that (subject to the landlord’s rights under section 17 below) it was to be so extended; (b) on the assumption that (subject to paragraph (a) above) the vendor was selling subject, in respect of rentcharges . . . to which section 11(2) below applies, to the same annual charge as the conveyance to the tenant is to be subject to, but the purchaser would otherwise be effectively exonerated until the termination of the tenancy from any liability or charge in respect of tenant’s incumbrances; and (c) on the assumption that (subject to paragraphs (a) and (b) above) the vendor was selling with and subject to the rights and burdens with and subject to which the conveyance to the tenant is to be made, and in particular with and subject to such permanent or extended rights and burdens as are to be created in order to give effect to section 10 below. 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 either party is dissatisfied with this decision, they may apply for permission to appeal to the Upper Tribunal (Lands Chamber) on any point of law arising from this Decision. Prior to making such an appeal, an application must be made, in writing, to this Tribunal for permission to appeal. Any such application must be made within 28 days of the issue of this decision to the person making the application (regulation 52 (2) of The Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rule 2013). If the application is not made within the 28-day time limit, such application 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 application for permission to appeal to proceed, despite not being within the time limit. The application 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 making the application is seeking. If the tribunal refuses to grant permission to appeal, a further application for permission may be made to the Upper Tribunal (Lands Chamber).