Acquisition of freehold — Valuation date — County court declaring tenants having right to collective enfranchisement using appellant as nominee purchaser — Landlord serving counternotice and requiring leasebacks — Leasehold valuation tribunal deciding property to be valued as at date of hearing before it — Whether property to be valued at that date or date of county court declaration — Appeal dismissed
In December 1996, the tenants of flats in a converted semi-detached house owned by the respondent landlord served notice, pursuant to section 13 of the Leasehold Reform, Housing and Urban Development Act 1993, of their intention to exercise their right to acquire the freehold of the property. The acquisition was to be made by the appellant company as the nominee purchaser. The landlord served a counternotice, stating that it did not admit the tenants’ right to collective enfranchisement, and the appellant brought proceedings seeking a declaration, under section 22 of the 1993 Act, that they were entitled to exercise that right. The county court granted the declaration in May 1999. In late 1999, the landlord served a further counternotice, setting out its proposals as to the terms of the acquisition, and stating that it wished to reserve leasebacks of two of the flats.
No agreement was reached as to the terms of acquisition, and the matter was referred to a leasehold valuation tribunal (LVT) for a hearing commencing in February 2000. By para 1(1)(a) of Schedule 6 to the 1993 Act, the LVT, in valuing the freehold, was required to take as the valuation date: “the date when it is determined either by agreement or by a leasehold valuation tribunal… what freehold interest in the specified premises is to be acquired by the nominee purchaser”. The LVT valued the property as at February 2000.
Both parties appealed against the valuation to the Lands Tribunal, which upheld the LVT’s finding as to the correct valuation date. The appellant appealed, contending that the correct valuation date was May 1999, when the physical extent of the land to be acquired had been determined in the county court order. The landlord contended, inter alia, that para 1(1) required a determination not simply of the physical extent of the land, but also of the quality of the freehold interest to be acquired, for instance whether it was to be unencumbered or whether the landlord was to reserve leasebacks. It submitted that that had not been done until the LVT hearing in February 2000.
Held: The appeal was dismissed.
Paragraph 1(1) referred specifically to a determination of the “freehold interest” to be acquired in the property, not merely the extent of the physical premises themselves. That phrase indicated that the quality of the freehold had also to be determined, including issues as to whether it was to be encumbered, for instance by the grant of leasebacks to the former landlord. That determination could be made either by agreement or by the LVT. In the instant case, the landlord’s second counternotice had not amounted to an agreement as to the extent of the freehold, since it had included a requirement for leasebacks that had not, at that stage, been agreed by the appellant. Accordingly, the valuation date was the date upon which the LVT decided that issue, namely February 2000.
Jonathan Gavaghan (instructed by Piper Smith & Basham) appeared for the appellant; Anthony Radevsky (instructed by Marshall Ross & Prevezer) appeared for the respondent.
Sally Dobson, barrister
