Leasehold enfranchisement – Lease extension – Section 56 of and Schedule 13 to Leasehold Reform, Housing and Urban Development Act 1993 – Premium payable – Deferment rate – Leasehold Valuation Tribunal (LVT) applying deferment rate of 6% by reference to Upper Tribunal decision involving another property in similar area – Rate including uplift to reflect location of property – Whether LVT erring in making uplift on insufficient evidence – Appeal allowed
The appellant was the freeholder of a two-bedroom, ground-floor maisonette in Birmingham B31. The tenant of the property applied for a new lease, pursuant to section 56 of the Leasehold Reform, Housing and Urban Development Act 1993. The leasehold valuation tribunal (LVT) determined the premium payable by the tenant under Schedule 13 to the Act at £6,544. In calculating the current value of the freehold reversion, it applied a deferment rate of 6%. In doing so, it followed the decision of the Upper Tribunal in Zuckerman v Trustees of Calthorpe Estate [2009] UKUT 235 (LC); [2010] 1 EGLR 187 in respect of another property in the West Midlands area, rather than applying the generic rate of 5% for flats in the prime central London area prescribed in Earl Cadogan v Sportelli [2007] 1 EGLR 153.
The appellant sought permission to appeal on the ground that the LVT’s had erred in deciding to follow Zuckerman in full. It pointed out that the Zuckerman rate had included a 0.25% uplift to reflect the greater management responsibilities imposed on landlords since the coming into force of the Service Charge Regulations 2003, whereas those regulations did not apply to its own property.
In refusing permission to appeal, the LVT explained that it had used the principles in Zuckerman as a starting point only and had also taken into account that the appellant’s property was in a less attractive location than the one in Zuckerman.
The appellant appealed to the Upper Tribunal, contending that neither party had presented evidence to the LVT on the relative attractions of the locations of its property and that in Zuckerman, such that the LVT could not justify a 0.25% uplift on that ground.
Held: The appeal was allowed.
Where neither party had presented evidence on the relative attractions of the appellant’s property and that considered in Zuckerman and in the absence of any other evidence it had not been open to the LVT to add 0.25% to the deferment rate to reflect inferior location. It should have determined a deferment rate of 5.75%. That produced a revised premium of £6,724.
The appeal was determined on written representations.
Sally Dobson, barrister
