Acquisition of freehold — Valuation — Appellant tenant holding long lease of premises converted into flats by predecessors in title — Tenant reconverting to single dwelling at own expense — Lands Tribunal deciding reconversion works not improvements to be disregarded for valuation purposes — Section 9(1A)(d) of Leasehold Reform Act 1967 — Appeal dismissed
The appellant tenant held a long lease, dated 1947, of a house in London NW8. The respondent was the freehold owner. The house had originally been constructed as a single dwelling, but, shortly after the grant of the 1947 lease to one of the appellant’s predecessors in title, it had been converted into five flats at the then tenant’s own expense. Successive tenants later converted it, in stages, back into a single dwelling, and that process was completed by the appellant at his own expense.
In November 1997, the tenant gave notice of his wish to acquire the freehold, pursuant to the provisions of the Leasehold Reform Act 1967. Accordingly, that was the date at which the property fell to be valued by the leasehold valuation tribunal (LVT) for the purposes of determining the premium to be paid by the appellant for the freehold. It was agreed, for the purposes of the valuation proceedings, that leases of the premises preceding the 1947 lease were to be considered together with that lease, pursuant to section 3(3) of the 1967 Act.
The appellant appealed to the Lands Tribunal against the LVT’s valuation. In its decision, the Lands Tribunal concluded that, in valuing the property, the works carried out by the appellant to reconvert the house were not to be disregarded as improvements pursuant to section 9(1A)(d) of the Act. That section required the tribunal to disregard “the extent to which the value of the house or premises has been increased by improvements done by the tenant or his predecessors in title at their own expense”.
On appeal, the appellant contended that the works did amount to improvements, since they had increased the value of the property. The respondent submitted that they were not improvements, as they merely reversed works to the property done by the tenant’s predecessors, namely conversion into flats, that would, at the date of valuation, have devalued it.
Held: The appeal was dismissed.
The wording of section 9(1A)(d), “works done by the tenant or his predecessors in title”, was to be taken as a whole, and the tenant and his predecessors in title were to be treated as a single body. It followed that works done by the tenant could not amount to improvements where they merely reversed works done by his predecessors that had depressed the value of the property. It was irrelevant that those earlier works had, at the time they were carried out, made the property more valuable. The assessment was to be made when the property fell to be valued. The property market was such that, at that date, namely November 1997, five flats were worth less than a single dwelling. If the appellant’s contentions were correct, the results would be surprising. Tenants would be able to take advantage of valuable works undertaken by their predecessors without having to bear the burden of those predecessors’ mistakes. They would also be able to claim credit for remedying works that were detrimental to the value of the property that they themselves had previously carried out. A construction of section 9(1A)(d) that had such an effect was to be avoided.
Edwin Johnson (instructed by David Conway & Co) appeared for the appellant; Kenneth Munro (instructed by Pemberton Greenish) appeared for the respondent.
Sally Dobson, barrister
