First & Second Floor, 297 Glyn Road, London E5 0JP: LON/00AM/OLR/2018/0853 LON/00AM/OLR/2018/0853

FIRST-TIER TRIBUNAL

PROPERTY CHAMBER (RESIDENTIAL PROPERTY)

Case No LON/00AM/OLR/2018/0853

Between

Victoria HoneyghanApplicant

Marian Pius Costello Determination of terms of leaseRespondent

Before

Mr N Martindale FRICS

Cavendish Legal Group for the Applicant

Date 14 August 2018

Property: 297 Glyn Road London E5 0JP

Type of application: extension (missing landlord)

DECISION

[1]The premium to be paid by the applicants for the lease extension at First and Second Floor Maisonette, 297 Glyn Road, London E5 0JP, registered at HM Land registry under title number EGL210862 (the “Property”) is £36,000. The draft deed of surrender and re-grant attached as an appendix to the applicants bundle, is approved. Introduction

[2]This is an application made under Section 50 and 51 of the Leasehold Reform, Housing and Urban Development Act 1993 (“the Act”) for a determination of the premium to be paid and the terms of an acquisition of an extension to the leasehold interest in the Property. The relevant legal provisions are set out in Appendix to this decision.

[3]The Property is a first and second floor maisonette, being the upper levels of a three storey building. The building was formerly a ground floor shop and upper parts, in part of a residential terrace. The upper floors constitutes a separate dwelling and the former shop was converted into a separate self contained flat. The whole Property dates from the 1890’s, the residential conversions from the 1980’s.

[4]The Applicant is the long leaseholder of the Property holds her interest under the terms of a lease dated 19 November 1987, registered under title number EGL210862. That lease was granted by the Respondent to Leah Archer and William Marshall for a term of 99 years from 25 December 1986. The lease reserves a rising ground rent: The first 33 years, £50 pa; the next 33 years £100 pa; the next 33 years £150 pa. The residual term of the lease is now vested in the Applicant, registered as leasehold proprietor on 23 December 2003.

[5]The registered freehold proprietor of the Property remains unchanged from the landlord at the grant of this lease and is the Respondent. She was registered as such under title number LN176730 on 27 February 1987.

[6]By order made by District Judge Hayes on 20 June 2018 and on the court being satisfied that the respondent could not be found, the matter was referred to this Tribunal for determination of the terms of a lease extension under S.51(5); that following this the Applicant will surrender her lease and a new lease will be granted; and that the new lease will be executed by Mr J Frankel of Cavendish Legal Group Limited in accordance with S.5(3) of Leasehold Reform Housing and Urban Development Act 1993.

[7]The Tribunal considered the issue on the papers submitted by the applicants, without a hearing, in accordance with directions issued on 29 June 2018. The case was to be determined in the week commencing 13 August 2018.

[8]The Tribunal’s jurisdiction is derived from the order made by the court on 20 June 2018. Statutory Basis

[9]Part 2, Schedule 13 to the Act provides that the price to be paid by the leaseholder, the applicant for the new leasehold interest where there is no intermediary head leaseholder, applies here.

[10]The premium payable in respect of the grant of a new lease is the total of:(a) the diminution in value of the landlord’s interest in the tenant’s flat as determined in accordance with paragraph 3,

(b) the landlord’s share of the marriage value as determined in accordance with paragraph 4, and

[11]The diminution is: 3(1) The diminution in value of the landlord’s interest is the difference between(a) the value of the landlord’s interest in the tenant’s flat prior to the grant of the new lease; and

(b) the value of his interest in the flat once the new lease is granted.

[12]Paragraph 4 of the Schedule, as amended, provides that the freeholder's share of the marriage value is to be 50%, and that any marriage value is to be ignored where the unexpired term of the lease exceeds eighty years at the valuation date. Here it is included as the unexpired term is less than eighty years.

[13]Paragraph 5 of the Schedule provides for the payment of compensation for other loss resulting from the enfranchisement. Evidence

[14]The applicants have provided a valuation report dated 26 February 2018 by Tim Henson of Messrs Clarke Hillyer Chartered Surveyors (“Valuation Report”).

[15]Having considered the contents of the Valuation Report and the opinions expressed by the valuer, the Tribunal is broadly satisfied that the method adopted is appropriate to determine the premium for the new lease for the Property. The Tribunal accepts the description of the Property and its location as stated.

[16]A photograph of the exterior of the Property was included in the Valuation Report. The Tribunal did not consider it necessary or proportionate to carry out an inspection of the Property. Valuation

[17]The first and second floor maisonette at 297 Glyn Road E5 0JP, consists of a private front entrance hall, stairs to the first floor, reception room/ kitchen, bathroom/WC and two bedrooms and a study on the second floor. There is access via rear open staircase to the rear garden.

[18]Entry to the hallway is via a small front garden. There is no off street parking or garage.

[19]It is stated in the Valuation Report that the first floor rooms have been opened up between kitchen and living room and a freestanding roof terrace added above a rear ground floor flat roof. It is assumed that had such obtaining consent of a landlord been possible, it would have been granted without premium. Any benefit of these improvements has been excluded from the valuation.

[20]The valuation date prescribed by section 51(1) of the Act is the date of the applicants’ application to the court namely 26 February 2018. The unexpired residue of the lease for the maisonette is 67.83 years.

[21]Mr Henson’s assessment of the market value of both flats is based on evidence of completed sales of three comparables. Two have long leases of well over 125 years unexpired, and all are within a 0.5km, and a are large split level maisonettes, two of which have access to gardens Making small adjustments for time between the sale dates, lack of garden here, and immediate surroundings produced a series of values between £540,000 and £560,000, averaging £550,000. Mr Henson adopts a long leasehold value for the Property of £550,000.

[22]The Tribunal is satisfied with the relevance and detail of the three comparable property sales provided in the Valuation Report and the valuer’s analysis of each in the assessment of the value of new long lease of the Property.

[23]The Tribunal notes and accepts the 1% adjustment by Mr Henson in uplifting the long lease value to its notional freehold value.

[24]Mr Henson having considered the RICS published graphs of relativity, which for 67.83 years show a range of 89.62% to 92.13% and adopts the average of 90.9% excluding the SE Leasehold date graph for property outside London and duly applies this percentage relativity.

[25]Mr Henson also considers that more consideration needs to be given to the impact of the ‘no At World’. While he is unable to refer to a specific authority for this he refers to an deduction of 2-3% on this to reflect that. From the foregoing he adopts a ‘blend’ of relativity outcomes at 89.9%.’ The Tribunal agrees with the need to reflect the absence of rights of extension as assumed under the Act and accepts the adjustment to 89.9% relativity here.

[26]The diminution in the value of the landlord's interest in the tenants’ maisonette is represented first by the capitalised value of the ground rent receivable under their lease. That small income stream is capitalised by Mr Henson at 7%, which the Tribunal accepts is appropriate in this case owing to the low, rising but still modest ground rent.

[27]Next, the effect of the lease extension will deprive the landlord of the property for a further 90 years in addition to the current unexpired term. The present value of that delayed reversion is determined by applying a deferment rate to the freehold value of the flat. The deferment rate appropriate for leasehold flats in Central London was authoritatively determined to be 5% in the case of Earl Cadogan v Sportelli (2006) LRA/50/2005. Mr Henson also adopts the Sportelli deferment rate of 5% which the Tribunal accepts.

[28]The marriage value is to be shared equally between the parties, as required by the Act.

[29]The Tribunal accepts the valuation for the property, as produced by Mr Henson and in particular his final opinion of value of £36,000 as expressed in his Valuation Report. The Tribunal has therefore not produced its own valuation.

[30]The premium to be paid by the applicant for the new lease of the Property is therefore £36,000, (Thirty Six Thousand Pounds). Name: Neil Martindale Date: 14 August 2018