53 Beechwood Court, West Street Lane, Carshalton Surrey SM5 2QA: LON/00BF/OLR/2018/1575 LON/00BF/OLR/2018/1575
FIRST-TIER TRIBUNAL
PROPERTY CHAMBER (RESIDENTIAL PROPERTY)
Case No LON/00BF/OLR/2018/1575
Between
(acting as Executors of the Late Michael Hugo Kelly) Mc Millian Williams Solicitors- and Mr Wilson Dunsin FRICS ofApplicantPierpont Capital Limited Malcolm Dear Whitfield Evans LLP solicitors –Respondent
Before
Mr D Jagger FRICSDunsin Surveyors appearing on behalf of the Applicants for the Applicantand Mr Patel of Manisures Limited appearing on behalf of the Respondents Section 48 of the Leasehold for the RespondentDate 30 April 2019Property: Lane, Carshalton Surrey SM5 2QA Mr Craig Dews and Ms Nicola DewsType of application: Reform, Housing and Urban Development Act 1993 Judge Daley
[1]The tribunal’s decision(1) Upon hearing from the parties, the tribunal determines that the relativity rate is 78.71%, the appropriate premium payable for the new lease is £45,082.(2) This application is made under the provisions of the Leasehold Reform, Housing and Urban Development Act 1993 (‘the 1993 Act’) for a determination of the premium payable for the grant of a new lease of 53 Beechwood Court, West Street Lane, Carshalton Surrey SM5 2QA (‘the subject property’). The background(3) The subject property is a purpose built flat on the second floor of a 4 storey block part of a private gated development of 78 units, built in approximately 1920. The property comprises a hallway, lounge, kitchen, two bedrooms and bathroom with WC, of 749 sq ft.(4) The subject property has a lease which was granted on 7 June 1976 for a term 99 years from 1 January 1972 to 31 December 2070, at a Ground Rent of £25 per annum doubling every 25 years.(5) By notice dated 3 September 2018, the Applicants asserted the right to the grant of a new extended lease at a premium of £37,200.00. By way of a counter notice dated 25 September 2018, the premium and lease terms were both disputed, with the Respondent landlord proposing a premium of £59,700.00.(6) The Respondent landlord also disputed the terms upon which the extended lease was to be granted, however at the hearing on 30 April 2019, it became apparent that the terms of the lease had been agreed, and that although the application had asked the disputed terms to be adjudicated on by the Tribunal, the parties had subsequently agreed on the terms and a draft lease had been provided in the bundle. The issues(7) The Tribunal noted that there was very little disagreement between the parties upon most of the issues and were matters were disagreed the parties were able to agree the issues upon all of the matters save the short/existing lease value. The matters which were agreed in the Statement of Agreed Facts and Disputed issues, and those matters subsequently agreed at the hearing are set out below:• Date of valuation: 3 September 2018• Unexpired Term: 52.33 years• Marriage value:50%• Relativity between Freehold Vacant Possession Value and Extended lease value: 99%• Deferment Rate: this was agreed at the hearing as being 5%• Capitalisation Rate: this was agreed at the hearing as being 6.5%• Extended Lease Value/ Freehold Vacant Possession Value: It was noted by the Tribunal that there was very little difference between the parties, and both surveyors were prepared to agree a value of £313,675.80(8) As all of the other matters had been agreed the Tribunal focused solely on the valuers’ evidence in respect of the existing leasehold value (and following on from this relativity).[2]The hearing (9) Both parties were represented by their valuers who had produced reports and gave oral evidence to the Tribunal. (10) Mr Dunsin spoke to his comprehensive report dated 16 April 2019. In paragraphs 5.03.36 & 5.03.37. He stated-: Flat 14 Beechwood Court is the best transaction evidence comparable for the determination of the Existing Lease Value of the subject property. It is an identical two bedroom purpose built flat in the same development. It currently has a short unextended lease. 5.03.37 Flat 14 Beechwood Court was sold with a short lease on 30th January 2018 by British Home Sellers for £195,000. It was then resold, also with the same short lease less than five months later on 11 June 2018 by Ushers Estate Agents for £285,000. (11) In his evidence before the Tribunal Mr Dunsin set out all of the factors which in his view, made the January sale evidence of Flat 14 Beechwood unreliable. He stated that the seller British Home Seller specialised at achieving a quick discounted sale. In his view this meant that they did not meet the criteria set out by the Royal Institution of Chartered Surveyors of a Market Value which was defined as “… the estimated amount for which an asset or liability should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing and where the parties had acted knowledgeably, prudently and without compulsion.” (2.02 of his report). (12) He referred the Tribunal to office copy entries which he had obtained from the Land Registry which supported his contention that the lease was of a similar term. He pointed to the sale in June 2018, which was by an established estate agent in the area as being more reliable for the short lease value with a sale having been achieved at £285,000 by Usher Estate Agent. At paragraph 5.03.41 he stated that -: The Land Registry House Price Index for Sutton equates the sale price of £285,000 as at 11 June 2018 to a value of £283,849 as at the valuation date of 3rd September 2018. I have applied the Value of Act Rights deductions of 6.50% to arrive at the Existing Lease Value (Without the Value of Act Rights) of £265,399. (13) He had also for the sake of completeness used the shorthand method set out by the Upper Tribunal in paragraph 60 of Sinclair Gardens set out in paragraphs 5.03.42 to 5,03.44 to arrive at the deduction of 6.5 to reflect the Value of Act Rights. (13) Mr Dunsin had also carried out an alternative method of valuation using an average of 5 relativity graphs, he explained that he had used the five Greater London and England Graphs and although he noted that they had their shortcomings he considered that collectively they are the best basket of evidence available for the determination of relativity in Greater London in the absence of Transactional evidence. By taking the average of the five graphs he arrived at a Relativity of 78.71%. (14) Mr Patel contended that the first sale in January 2018 o