We use cookies to improve our site and your experience. By continuing to browse on this website you accept the use of cookies. Read more...

An appeal against a decision of the Leasehold Valuation Tribunal for the Midland Rent Assessment Panel by Clarise Properties Limited (Re: 167 Kingshurst Road) [2012] UKUT 4 (LC)

In a recent decision the Upper Tribunal has provided guidance on the correct method of valuing the freehold during leasehold enfranchisement of a dwelling house under s9(1) of the Leasehold Reform Act 1967 and confirmed the limit scope of correction certificates.

In determining the price to be paid for the freehold interest of a dwelling house the LVT had applied a two stage valuation, valuing the landlord's reversion on the basis of the section 15 rent in perpetuity. The Appellant contended that this was incorrect and that the three stage process known as the "Haresign addition" should have been used. As set out in Haresign v St John's College, Oxford (1980) 255 EG 711 this would have quantified separately an addition to represent the present value of the landlord's reversion to the standing house value after the expiry of the 50 year extension to the term.

The Upper Tribunal (Lands Tribunal) acknowledged that the two stage valuation process had previously been endorsed as the standard valuation practice - the Haresign addition being treated as an exception. However, as a result of the substantial increase in real terms of house prices and the lower deferment rates that are applied as a result of the Sportelli decision, there is now (unlike when the two-stage process became standard practice) a much greater likelihood that the ultimate reversion will have a significant value. Accordingly, the three-stage approach should be preferred. "As a matter of good valuation practice, where a price has to be determined, every element of value should in general be separately assessed unless there is some good reason not to do so... The only relevant question is whether the reversion does have a significant value. In future, therefore, we consider that the appropriate approach will be to capitalise the section 15 rent to the end of the 50-year extension and to assess the value (if any) of the ultimate reversion".

The decision also confirmed that correction certificates only have limited scope (analogous to correcting a slip) and could not be used to rewrite substantive parts of a decision.

Elizabeth Haggerty / 2nd Feb 2012


The information and any commentary on the law contained on this web site is provided free of charge for information purposes only. Every reasonable effort is made to make the information and commentary accurate and up to date, but no responsibility for its accuracy and correctness, or for any consequences of relying on it, is assumed by any member of Chambers. The information and commentary does not, and is not intended to, amount to legal advice to any person on a specific case or matter. You are strongly advised to obtain specific, personal advice from a lawyer about your case or matter and not to rely on the information or comments on this site. No responsibility is accepted for the content or accuracy of linked sites.

Download as PDF

Back to News