This lease extension case was heard by the Leasehold Valuation Leasehold Valuation Tribunal Pursuant to application under section 48 of the Leasehold Reform, Housing and Urban Development Act 1993 for the determination of the price to be paid in respect of a lease extension for the property 89C Castelnau, Barnes, London SW13.
The Leasehold owner was Mr Hans Jurgen Blackenburg and is the lessee of the subject property The Respondent landlord was Mr llija Kusturovic
The matters in issue before the Leasehold Valuation Tribunal were -
(a) the price to paid in respect of the lease extension; and
(b) the freeholder's costs pursuant to section 60 of the Act;
At the hearing of this application for the lease extension, both parties' representatives gave evidence and made submissions. They had sought to agree various matters prior to the commencement of the hearing. It was agreed between the parties that valuation date was 19 May 2005. The term of the existing lease was agreed at 99 years from 30 July 82 - thus the lease had some 76. . 2 years unexpired. The ground rent payable was £35 per annum without review and the rate at which the ground rent should be capitalised was agreed at 9%.
Helpfully, at the commencement of the hearing the parties further agreed that the value of the extended lease was £307, 500 to which tenants' improvements had added £. 1000. Further the leasehold owner said he was not concerned in this case with the 1 1/2% uplift to freehold sought by Mr McDonald as it Was of little valuation significance.
There was also a separate dispute regarding the landlord's section 60 costs, although again the parties agreed during the course of the hearing the Landlord's solicitors' fees at £750 plus VAT.
The leasehold owner, submitted that for leases of this length in outer London locations, the Act had little impact on values and purchasers did not differentiate greatly in the price they were prepared to pay provided the unexpired term was sufficient for a mortgage to be obtained His 2. 5% differential he further sought to support by reference to two decisions of the Leasehold Valuation and a lease extension that he had negotiated in respect of 7A St Hilda's Road SW13, which was 69 years agreed at 9. 5 % in October 2005 On yield he proposed a deferment rate of 9%, which he supported by reference to that agreement and a Leasehold Valuation Tribunal decision in respect of 22 Rocks Lane, valuation £4, 154 in July 2001.
On the freeholder's section 60 costs the leasehold owner disputed Mr McDonald's valuation fee in its entirety on the basis that the valuation was carried out after the counter notice.
Determination of lease extension
With regard to the relativity the Leasehold Valuation Tribunal is aware from its knowledge and experience that in outer London suburban locations buyers are perhaps less sensitive to lease length provided it is of a reasonable duration than purchasers of properties in prime central London. Equally the granting of rights under the Act has also had less effect on values in locations such as this when compared to prime central London. It is for this reason that the graph of Leasehold Valuation Tribunals determined relatively plotted by Beckett and Kay is higher than any of the similar graphs relating to central London properties when the unexpired term exceeds 60 years. However, the Leasehold Valuation Tribunal could not accept the leasehold owners view that the differential was only 2 5%. Equally, Mr McDonald's graph-based 92. 5% producing a price differential of in excess of £20, 000 appeared to the Leasehold Valuation Tribunal to be on the high side given the location and type of leasehold property concerned. Whilst not disputed by Mr O'Keefe, Mr McDonald's 1. 5% uplift nevertheless appeared to the Leasehold Valuation Tribunal to be excessive bearing in mind the location of the property and the sort of purchasers that it would attract. To the lease extension value of £306, 5000 excluding improvements the Leasehold Valuation Tribunal was of the view that an addition of no more than £2500 was justified giving a freehold value of £309, 000. Applying a relativity of 94% to the freehold value gave an existing lease value of £290, 460, say £290, 000
On the deferment rate it appeared to the Leasehold Valuation Tribunal that the leasehold owner had not had regard to the trend of falling yields over recent years as highlighted by the decision of the Lands Leasehold Valuation Tribunal in Arbib. , Whilst the freeholder reversion owner provided little support for his 7%, in the Leasehold Tribunal's opinion this was the appropriate rate at which to defer the landlord's reversion.
The Leasehold Valuation Tribunal's decision was for the lease extension premium to be in the sum of £9, 340
Lease Extension Decision
The premium to paid respect of the lease extension for 89C
Castelnau, Barnes, London SW13 was £9, 340.