Decision Nº LRA 48 2013. Upper Tribunal (Lands Chamber), 23-04-2014
| Jurisdiction | UK Non-devolved |
| Judge | Mr Andrew J Trott FRICS Martin Rodger QC, Deputy President |
| Date | 23 April 2014 |
| Court | Upper Tribunal (Lands Chamber) |
| Judgement Number | LRA 48 2013 |
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UPPER TRIBUNAL (LANDS CHAMBER) |
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UT Neutral citation number: [2014] UKUT 0079 (LC)
UTLC Case Number: LRA/48/2013
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
LEASEHOLD ENFRANCHISEMENT – deferment rate - use of Upper Tribunal decisions as evidence of facts found – evidence required to justify departure from Sportelli deferment rate outside prime central London – whether reliance on Zuckerman permissible – risk of long term growth rate not being achieved – risk of deterioration of low value property of conventional design – management issues in maisonettes – appeal allowed in part
IN THE MATTER OF AN APPEAL FROM A DECISION OF THE
LEASEHOLD VALUATION TRIBUNAL FOR THE
MIDLAND RENT ASSESSMENT PANEL
BY
LIMITED
Re: 7 Grange Crescent
Halesowen
West Midlands
B63 3ED
Before: Martin Rodger QC, Deputy President and A J Trott FRICS
Sitting at: 43-45 Bedford Square, London WC1B 3AS
on
11 February 2014
Mr Oliver Radley-Gardner of Counsel, instructed by W H Matthews & Co, for the appellant
The following cases are referred to in this decision:
Earl Cadogan and Cadogan Estates Limited v Sportelli and others [2007] 1 EGLR 153 (LT); [2008] 1 WLR 2142 (CA)Hildron Finance Limited v Greenhill Hampstead Limited (2007) LRA/120/2006
Daejan Investments Limited v The Holt (Freehold) Limited (2008) LRA/133/2006
Lippe Cik v Chavda (2008) LRA/111/2007
Culley v Daejan Properties Ltd [2009] UKUT 168 (LC)
Earl Cadogan v Erkman [2009] 1 EGLR 87
Mansal Securities Limited’s Appeal [2009] 2 EGLR 87
Zuckerman v Trustees of the Calthorpe Estate [2009] UKUT 235
Daejan Investments Ltd v Benson [2013] 1 WLR 854
Voyvoda v Grosvenor West End Properties [2013] UKUT 0334 (LC)
Clarise Properties Ltd [2012] UKUT 4 (LC)
31 Cadogan Square v Cadogan [2010] UKUT 321 (LC)
Arrowdell Limited v Coniston Court (North) Hove Limited [2007] RVR 39
Land Securities v Westminster City Council [1993] 1 WLR 286
Lethaby and Regis’ Appeal [2010] UKUT 86 (LC)
DECISION Introduction-
This is an appeal against a decision of the Midland Leasehold Valuation Tribunal (“the LVT”) given on 20 November 2012 by which it determined the premium payable for a new lease of 7 Grange Crescent, Halesowen, West Midlands, B63 3ED under section 48 of the Leasehold Reform Housing and Urban Development Act 1993 (“the 1993 Act”). The LVT decided that the price payable should be £10,407, the figure contended for by the valuer instructed on behalf of the leaseholder; it rejected the figure of £15,990 advanced on behalf of the landlord.
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The parties agreed that the freehold vacant possession value of 7 Grange Crescent was £96,600 and only two valuation issues had to be considered by the LVT, namely the deferment rate and the value of the existing leasehold interest. This appeal is concerned only with the deferment rate and proceeded before us as a review with a view to a re-hearing.
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The evidence presented to the LVT on behalf of the tenant by Mr A W Brunt FRICS of Anthony Brunt & Co on the issue of the deferment rate supported a rate of 5.75% which rested, Mr Brunt explained, “on the Upper Tribunal appeal in what is now known as the Zuckerman case”, as well as on his own experience of agreeing deferment rates of 5.75% and 6% on maisonettes and flats respectively with other chartered surveyors in the Midlands.
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In his evidence on behalf of the landlord, Mr G T Holden FRICS of Parsons Son & Basley LLP relied on the decision of the Lands Tribunal in Earl Cadogan and Cadogan Estates Limited v Sportelli and others [2007] 1 EGLR 153 in support of a deferment rate of 4.75%.
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The LVT dealt with the issue of the deferment rate at paragraph 17 of its decision, as follows:
“The Tribunal considers that the starting point for the calculation of the deferment rate is Sportelli, subject in this case to the modifications in Zuckerman. Although no new evidence was introduced in this case, it is now generally accepted that in the Midlands area a higher deferment rate should be adopted. Following the Sportelli decision, Zuckerman increased the deferment rate by 0.5% to reflect poorer growth outside PCL [prime central London] and a further 0.25% to reflect obsolescence and deterioration which the Tribunal consider appropriate to this matter. The deferment rate adopted by the Tribunal is, therefore, 5.75%.”
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In refusing permission to appeal the LVT noted that the decision in Zuckerman was concerned principally with the West Midlands “of which Halesowen is very much part” and had been widely adopted by the Midland Leasehold Valuation Tribunal since the decision was handed down. The LVT went on:
“It is both unreasonable and unnecessary to expect that, in every case of this nature before the Midlands Tribunal, the same level of evidence should have to be provided as in Zuckerman in order to justify adopting the principles of that case. That would be as absurd as expecting the full evidential burden of Sportelli to be provided in every case in Prime Central London before the principles of that case could be adopted.
The Tribunal is entitled, where appropriate, to take inference and guidance from established principles and cases – as it has in this instance from Zuckerman.”
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In granting permission to appeal on 22 July 2013, the Tribunal said that:
“It is appropriate for the Tribunal to consider the status which [first-tier tribunals] may afford to the Tribunal’s decision in Zuckerman in modest lease extension cases where relatively limited evidence is presented to establish the premium payable.”
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After receiving a copy of the appellant’s statement of case in the appeal the leaseholder, who had been the applicant before the LVT, instructed Mr Brunt to inform the Tribunal that she would take no part in the appeal which has therefore proceeded unopposed.
The issue
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The issue in this appeal is whether the LVT was entitled simply to adopt the deferment rate used by the Tribunal in Zuckerman, and to treat the facts established in that case and the conclusions drawn from them as applicable to the valuation of 7 Grange Crescent without the need for those facts to be independently established by evidence presented to it. Was the LVT, in effect, entitled to follow Zuckerman as providing guidance on deferment rates in the West Midlands, or was it required in the absence of convincing evidence to adhere to the deferment rates identified by the Lands Tribunal in Sportelli?
The Facts
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7 Grange Crescent is a conventional maisonette on the ground floor of a two-storey pitched- roof building designed as four self-contained maisonettes, two on the ground floor and two on the upper floor, each having its own separate entrance. The Tribunal has been provided with photographs of the appeal property and others in Grange Crescent, a cul-de-sac largely comprising buildings of similar design.
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The appeal property was described by the LVT, which carried out an inspection, as comprising a side entrance hall, lounge, kitchen, two bedrooms and bathroom. It includes a large front garden, with a smaller area to the rear and a garage, which is one of a pair located at the rear of the property.
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The appeal property was the subject of a lease granted on 24 October 1962. We infer from the content of that lease, and from the appearance of the property, that it was newly-built at that time. The lease is for a term of 99 years from 25 March 1961 and was granted in consideration of a premium of £2,690 and at a ground rent of £15 per annum. It was agreed that 48.29 years of the term remained when on 9 December 2011 the leaseholder exercised her right under section 42 of the 1993 Act to claim a new lease of the property for a term equal to the unexpired term plus an additional 90 years at a peppercorn rent. The claim to a new lease was admitted by the appellant, who proposed a premium of £14,846 rather than the £10,431 suggested in the leaseholder’s notice of claim.
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The terms of the lease identify the demised premises by reference to a colour plan and a general description that they comprise “the lower maisonette of the building now or hereafter to be constructed upon the piece of land… and the garage and coal store appurtenant thereto.”
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The lease includes a covenant by the leaseholder at clause...
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