“1. It is strongly arguable that, having regard to the observations of the Lands Tribunal in Arrowdell Ltd v Coniston Court (North) Hove Ltd [2007] RVR 39 (para 38), the LVT was wrong to base its determination of relativity on previous LVT decisions. 2. This appeal will be limited to the issue of relativity and be by way of rehearing. 3. It should be borne in mind that expressions of opinion as to value, to be treated as expert evidence, need to be independent. 4. …”
“1. In referring in paragraph 20 to a “line of Tribunal decisions” and deciding in paragraph 21 that “the established (relativity) percentages in the Midlands should be used”, it appears that the LVT may have wrongly based its decision largely on previous LVT decisions, notwithstanding its reference to having adopted a broad brush approach. 2. The appeal will be restricted to the issue of relativity…”
“26. … The tribunal considers that graphs based upon the Midlands information can generally be preferred to ones that draw more heavily on information from the South East in general and London in particular. There can be local markets and the average or unit cost of leasehold flats is generally lower in the Midlands than in London…. 27. Further, the tribunal rejects the argument that reliance on other tribunal decisions creates some sort of circularity or decision basis isolated from the market at large. Whilst some decisions will have been based on previous tribunal decisions, there will frequently be an admixture of market evidence or reliance on tribunal decisions that are entirely market based (for example, that of 31 Griffin Court, Edgbaston). The tribunal will generally prefer market evidence where it is available, and will almost always have regard to the tone of the market when considering the outcome of graphic evidence. Underlying every tribunal decision is the statutory requirements for assessing valuation, and these relate to the no-Act market. 28. Furthermore, it is a false hypothesis to assume that settlements do not suffer from a number of potential distortions: there are poorly represented tenants, there are tenants who may be subject to pressures unrelated to the market place, and many settlements amount to “second guessing” what will happen at a tribunal, whilst taking into account the cost and inconvenience of entering into a formal dispute [known as the Delaforce effect]…” 8. LRA/45/2011 (Midland Freeholds Ltd) 38 Lyneham Gardens, Sutton Coldfield B76 1XH. This is a purpose built ground floor maisonette about 8 miles North East of Birmingham, built by Bryant Homes Ltd, and contains living room, kitchen, two bedrooms and bathroom. There is a garage in a separate block. With 63.67 years remaining, the applicants, through their surveyor, Mr A W Brunt FRICS, sought a relativity of 93% based upon the Lawrence and Wightman Midlands graph. Mr Fell, again relying on the Nesbitt & Co graph, sought 87%. The LVT accepted the applicant tenants’ arguments and adopted 93%, giving a premium of£6,059 , saying: “28 The tribunal determined that as the geographical spread of the Nesbitt & Co graph was expressed to be predominantly Greater London and the outer suburbs with a proportion of provincial towns covering the South Coast and Midlands region it was inappropriate to adhere rigidly to it.”
“16. …. It is very useful to have a reasonable number of direct comparables in the same road… The tribunal considers that the starting point for determining the extended lease value for both properties is£91,500 . There is a direct comparable at this price at 21 Bickton Close [extended], and the sale date is between the valuation dates. 19. There are two properties in the Table at paragraph 9 which sold on the existing lease. The earlier of these was 39 Bickton Close which was sold in December 2008 for£94,000 . The more recent, and hence the most useful, is 53 Bickton Close which was sold in July 2010 for£80,000 . 39 Bickton Close seems at variance with the other sales in the Table, but the market has declined since that sale. The tribunal note the advice in Arrowdell … and whilst the various comparability graphs may be imperfect, tribunals should have regard to what is available in the absence of evidence compelling the adoption of other figures. The tribunal do not find that the single comparable of 53 Bickton Close is itself compelling evidence, but is a useful cross-check against the values obtained by applying relativity. 20. The evidence brought forward at the hearing is that in Prime Central London and the South Coast, relativity is greater than in the Midlands area. The Nesbitt & Co graph may be the only graph containing any figures for the Midlands in the RICS graphs, but in view of the obviously limited amount which it contains, the tribunal considers that it should be treated with caution. Mr Brunt’s suggestion of 91% is broadly in line with the line of tribunal decisions he has brought forward. Although it was not introduced into evidence the percentage used was stated by Mr Brunt to be in line with the graph which is used regularly in the Midlands area and is known as the “Lawrence and Wightman” graph. 21. The tribunal considers that the percentage chosen by Mr Brunt is more appropriate than the lower percentage extracted from the Nesbitt & Co graph by Mr Fell. The tribunal accepts the evidence that relativities are higher in London and the South and feel that the established percentages in the Midlands should be used. However, the tribunal prefers to adopt a “broad brush” approach and finds that a relativity of 90% should be applied to both properties….”
“39. The difficulty that confronts every LVT, as it now confronts us, in seeking to determine the appropriate relativity to apply in a particular case is the inadequacy of the available evidence. If no assistance is to be derived from earlier LVT decisions for the reasons we have just given, the same will go for settlements that have themselves been based on such decisions. In such circumstances, in our view, it is necessary for the tribunal to do the best it can with any evidence of transactions that can be usefully applied, even though such transactions take place in the real world rather than the no-Act world. Regard can also be had to graphs of relativity, as we say below, and later on we suggest that greater guidance could be derived from this particular type of evidence.”
“57. As we have said above, we have been acutely aware of the difficulty of reaching a satisfactory conclusion on relativity in the light of the inadequacy of the available evidence, and it is clear that this is a problem that is likely to confront LVTs in all such cases. The likelihood is that decisions will be varied and inconsistent, while if local perceptions of relativities are built up as the result of decisions and settlements it is improbable that these will properly reflect no-Act values. Against this background, we consider that graphs of relativity are capable of providing the most useful guidance. While it may be that relativities will vary between one type of property and another, and from area to area, we think that there is little doubt that the predominant factor is the length of the term. It ought, we believe, to be possible to produce standard graphs, distinguishing between mortgage-dependent markets and those that are not so dependent, on the basis of a survey of assessments made by experienced valuers addressing themselves properly to the hypothetical no-Act world. We express the hope that the Royal Institution of Chartered Surveyors may find itself able to carry out such an exercise and to produce guidance in the form of standard graphs that can readily be applied by valuers in carrying out enfranchisement valuations. Such graphs could be used as evidence by LVTs, with the relativities shown being applied by them in the absence of evidence compelling the adoption of other figures.” 14. In Nailrile , the Tribunal agreed, and said, at para 228(s): “(s) Relativity is best established by doing the best one can with such transaction evidence as may be available and with graphs of relativity…”
“9. Mr Moore has been unable to find any evidence of extended lease sales…He has used the graph prepared by Lawrence and Wightman which gave a relativity of just over 93% as both a guide and a check. However, on being questioned by the tribunal, he conceded that the Lawrence and Wightman figure was too high, and he had “come down from that”. 10. We are not persuaded by Mr Moore’s argument. There is very little evidential value in the analysis of a small number of LVT decisions. The Lawrence and Wightman figure is, as Mr Moore concedes, considerably out of line with other methods of determining relativity. 13 In the absence of satisfactory market evidence of extended lease sales and in view of our criticism of the approach of both valuers we have looked at public research collated by RICS in its Research Report of October 2009. We find that the graph produced by LEASE is, in the absence of any better evidence, the most appropriate, and we adopt a relativity 89% as being appropriate for a lease with an unexpired term of approximately 62.25 years.” 19. In respect of an LVT case relating to 11 flats at Sadlers Court, Abingdon, Oxon where Mr Michael Cannon FRICS, a partner in Lawrence & Wightman had acted for the lessees, it was recorded in the decision (CAM/38UE/OJR/2010/0024) at para 7.5 that he said: “7.5. Mr Cannon stated that due to absence of any market evidence as to long lease values, reliance must be placed on the use of graphs in order to ascertain the relativity between short lease and long lease values. Mr Cannon’s preference was to use the LEASE graph as in his opinion it was the most commonly used graph and provides the best or independent evidence as to relativity…. 7.6 Mr Cannon makes no further adjustment for the “no-Act world”
“40. I do not accept Mr Spratt’s assertion that relativity must reflect location; he produced no evidence to support it other than to say that the graph of graphs was based solely upon non-comparable central London transactions. In Arrowdell , a case concerning a property in Hove, the Tribunal relied upon a graph showing relativities in the London suburbs. In the absence of more satisfactory evidence I therefore rely upon the graph of graphs. Mr Pridell’s [the applicant’s surveyor] own graph is said by him to have been based upon LVT decisions and settlements. As such, it is subject to the same criticisms of LVT decisions made in Arrowdell …. The use of settlements was criticised in Arbib v Earl Cadogan[2005] 3 EGLR 139 and again in Nailrile. 41. I accept Mr Priddell’s view that the graph of graphs is used to determine a relativity that reflects the benefit of the Act and requires no further adjustment.”