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Absent Freehold Valuation

The normal course of action when wanting to acquire the freehold of your building involves the serving of a S13 notice under the Leasehold Reform, Housing and Urban Development Act 1993. The Landlord and Tenant Act 1987 (87 Act) is much less understood and much less utilized method as is enacted if the freeholder is ‘in breach of obligations to repair, maintain, insure or manage the building’. A more detailed analysis can be found in one of our previous blogs.

The process is one that needs to be carefully managed between the client’s legal team, working closely at the appropriate point with a chartered surveyor. If it is decided that a client wishes to go down this route, then the solicitor makes an application that is determined by the courts, but ultimately is determined by the First Tier Tribunal (FTT) in respect to the valuation.

The valuation date is not defined under the 87 Act but in this instance the FTT went as far as to state that that the valuation date shall be the date on which the Applicant lodged their claim with the County Court. It is also the task of the President of the Upper Tribunal to nominate a surveyor or surveying firm to undertake the valuation (copy of instruction letter below).

The Report

Upon inspecting the property is was clear that the property was been subject to some recent external repairs in order to make the building habitable. It had however, been confirmed by the legal team that it was not part of my instruction to prove that the property met the requirements to be valued under the 87 Act.

Of the three flats in the building, one was held on a lease greater than 80 years, whereas the first floor and second floor flats were held on 67 year leases for which marriage value, payable as hope value needed to be determined. The two precedent setting cases of Culley v Daejan Properties Limited (hope value at 10% for 65.37 years) and Sloane Stanley Estate v Charles Carey-Morgan (hope value at 10% of marriage value 70.25 years) allowed me to conclude the same 10% for the subject properties.

Conclusion

A collective group of leaseholders have more than a singular choice as to which Act they use when looking to enfranchise and the complexity of different timescales, procedures, costs and likely premiums can make it a daunting process. In this case, the file had already been significantly progressed and was nearing the final stage of the FTT determining the premium payable. For this they needed an expert witness report from a chartered surveyor, who also had familiarity with the valuation principles under the 87 Act.

One of the truest tests of a report under this format is whether the valuer is called to give evidence in person at the FTT hearing. If they are, it would be to clarify an aspect of the report that the panel of experts do not understand or believe is in sufficient detail. The valuer, Matthew Price BSc MRICS was not called to give such evidence and to date, every expert witness report submitted in the instance of an absent landlord has been accepted by the FTT with no further questioning.

If you believe that you have a case of an absent landlord and require expert advice, email us at surveying@peterbarry.co.uk or call us on 020 7183 2578.