Appellant’s predecessor in title converting house to flats — Appellant reconverting back into house — Whether reconversion “improvement” for purposes of section 9 of Leasehold Reform Act 1967 — Appeal allowed
In 1991, the appellant purchased a long lease of a house. Previous tenants, who counted as the appellant’s “predecessors in title” for the purposes of the Leasehold Reform Act 1967, had made alterations to the property, adding an additional storey and converting it into flats. The appellant reconverted the house into one family home.
The appellant gave notice of his desire to purchase the freehold, and the question arose as to how the value of the house should be determined. Section 9(1A) of the Act stated that the price should be that which, at the “relevant time”, the house might be expected to realise. Section 9(1A)(d) stipulated that the price should be adjusted to reflect any increase in value attributable to improvements that a tenant or his predecessors in title had made at their own expense.
It was common ground that the appellant was entitled to a deduction in price for the extent to which the value of the house had been increased by the additional storey. The issue was whether he was entitled to any deduction for the value that he had added to the house by reconverting it from five flats into a single dwelling.
The leasehold valuation tribunal had held that the tenant could not benefit from the reconversion works because they had restored the house only to its original configuration, and such works did not constitute “improvements” for the purposes of section 9 of the Act. That decision was upheld by the Lands Tribunal and the Court of Appeal.
Held: The appeal was allowed.
The language of section 9(1A)(d) of the Act was clear. In order to secure a reduction in price, the tenant had to show that “any improvements” to the property had been carried out at his expense or that of his predecessor in title, and had increased the value of the property as from the date of the original grant.
In the instant case, those conditions had been satisfied. Two sets of improvements had been made before the appellant had acquired the lease; the additional storey and the conversion into flats. The appellant had removed the second set of improvements and substituted his own.
The concept of “improvement” connoted additions or alterations that went beyond mere renewals or repairs, but it was not necessarily an economic concept. A tenant might have carried out work that he considered to be an improvement, but which did not result in an increase in value to the property. In the instant case, at the time of the conversion from a house into flats, the “improvements” might have made the property more marketable, but, because of changing market conditions, those same “improvements”, by the time the house came to be valued for sale, would have reduced its economic worth so that, by the date of valuation, the property comprising five flats would have been worth less than the property reconverted into a family home.
The calculation was straightforward and was a simple causal relationship; but for the appellant’s improvement, the house and premises would have been worth less. The comparison for the sake of the calculation was, therefore, between the value of the house as it stood, with the benefit of the improvement made by the addition of another storey and the work done by the appellant, and its value if those improvements had not been made. The improvement by converting the house to flats was irrelevant to the value of the house at the valuation date because the flats had ceased to exist.
Edwin Johnson (instructed by David Conway & Co) appeared for the appellant; Kenneth Munro (instructed by Pemberton Greenish) appeared for the respondent.
Vivienne Lane, barrister
