England and Wales Lands Tribunal

[2000] EWLands LRA_9_2000 (05 October 2000)


31.50 Yrs
8.85 Yrs

LRA/9/2000

LANDS TRIBUNAL ACT 1949

LEASEHOLD ENFRANCHISEMENT - Premium payable for new extended lease of flat

- Value of existing lease - Value of extended lease - Deferment yield rate - Evidential value of settlements - Appeal dismissed.

IN THE MATTER OF AN APPEAL FROM A DECISION OF

THE LEASEHOLD VALUATION TRIBUNAL FOR

THE LONDON RENT ASSESSMENT PANEL

BETWEEN HOWARD DE WALDEN ESTATES LIMITED Appellant

and

ADAM VON DIOSZEGHY Respondent

Re: Flat 7, Carisbrooke Court

63-69 Weymouth Street

London W1N 3LJ

Before: N J Rose FRICS

Sitting in public at 48/49 Chancery Lane, London WC2A 1JR

on 14 September 2000

The following cases are referred to in this decision:

Lloyd-Jones v Church Commissioners for England (1981) 261 EG 471

Cadogan Estates Ltd v Hows and Another [1989} 48 EG 167

Land Securities Plc v Westminster City Council {1992} 44 EG 153

Christopher Stoner, instructed by Speechly Bircham, for the Appellant

The Respondent in person.


 


DECISION

1. This is an appeal by Howard de Walden Estates Limited ("the appellant"), the freeholder of Carisbrooke Court, 63-69 Weymouth Street, London W1N 3LJ against a decision by the Leasehold Valuation Tribunal for the London Rent Assessment Panel ("the LVT") determining the price payable to the appellant for a new extended lease of Flat 7, Carisbrooke Court ("the subject property") by Mr Adam Von Dioszeghy ("the respondent") under the provisions of s48 of the Leasehold Reform, Housing and Urban Development Act 1993 ("the 1993 Act") at £44,150. The appellant contended for a price of £54,450. The respondent's case was that the LVT decision was correct or, alternatively, that it erred in favour of the appellant. In any event, there was no cross-appeal and the respondent did not suggest that the figure determined by the LVT should be increased. The agreed valuation date is 10 May 1999.
2. Mr Stoner, counsel for the appellant, called Mr J M Clark BSc ARICS, an Associate of Messrs Gerald Eve and Mr K Ryan, ARICS, managing director of Egerton (London Residential) Ltd. The respondent appeared in person and gave evidence.
3. I inspected the subject property in company with representatives of the parties on 28 September 2000. On the same day I made an unaccompanied external inspection of various properties which had been referred to as comparables.

Facts

4. From an agreed statement and from the evidence I find the following facts. Carisbrooke Court is an inter-war purpose built block of 14 flats, arranged on basement, ground and five upper floors. There are separate commercial premises on the ground floor. The block is located on the corner of Weymouth Street and Marylebone Street on the Howard de Walden Estate within the Harley Street Conservation Area. The services provided by the building include passenger lift, communal central heating/hot water and entryphone. The main entrance hall of the block is small and the common parts, although not having been refurbished in recent years, are clean and well presented.
5. The subject property is located on the third floor, with the living room facing east on to Marylebone Street and also having a window on to a central light well. The bedroom faces north on to Weymouth Street. The kitchen and bathroom have windows opening on to the central light well. The accommodation comprises entrance hall; reception room (17ft 6ins x 13ft 9ins); bedroom (14ft 4ins x 11ft 4 ins); kitchen (9ft 6ins x 6ft 8ins) and bathroom (6ft 8ins x 6ft 0ins). The gross internal area is approximately 565 sq ft.
6. The subject property is within easy reach of the varied shopping and recreational facilities of "Marylebone Village". The focal point of the area is Marylebone High Street, which has recently seen an influx of new retail outlets (including a Waitrose supermarket opened in late 1999) and both formal and informal restaurant/cafe facilities. An environmental improvement scheme by the appellant and the City of Westminster Council is planned. That will reduce the impact of traffic on Marylebone High Street and local residential streets, and improve traffic and pedestrian safety as well as the environment and amenity of the general locality.
7. The subject property is in fair decorative decoration, with plain emulsion painted walls and ceilings throughout. The kitchen has some basic wall and floor units and appliances, with a worktop incorporating a sink and drainer with a tiled splashback. The bathroom is tiled in part with a panelled bath, pedestal wash basin and low level wc. The sanitary ware and fittings are of a basic standard and appear to be several years old. The central heating is limited to two radiators in the living room and bedroom. In general the flat presents well, but if the respondent's furniture, pictures and effects were removed, it would require updating and redecorating. The respondent has carried out various works to the subject property since he first acquired his leasehold interest. The only works which added significantly to the property's market value at the valuation date were the six replacement uPVC double glazed windows, installed in October 1991 at a cost of approximately £4,800.
8. At the valuation date the respondent's underlease had an unexpired term of 31 years 10 months.

Issues

9. It is agreed that the uplift to be applied to the unimproved vacant possession value of the flat with the benefit of the proposed extended lease to arrive at the equivalent freehold value is 2 per cent; that the proportion of the total premium payable to the head-leaseholder is £900 (of which approximately £400 represents part of the marriage value) and that the remainder of the marriage value is to be apportioned equally between the appellant and the respondent.

The issues in dispute before me were as follows:

(i) The value of the respondent's existing lease, disregarding the value, if any, of tenant's improvements and also the respondent's right to an extended lease under the 1993 Act.

(ii) The value of the proposed extended lease, for 121.83 years at a peppercorn, assuming vacant possession and disregarding the value, if any, attributable to tenant's improvements.

(iii) The yield rate at which the value of the freeholder's reversionary interest is to be deferred until expiry of the head lease on 6 April 2031.

10. The differences between the appellant's valuation (Appendix 1), that of the LVT (Appendix 2) and the figures mentioned in the respondent's statement of case as an alternative to those of the LVT are as follows:

	Appellant	LVT	Respondent (Alternative)
Extended Lease	£190,000	£180,000	£160,000
Existing lease	£110,000	£115,000	£120,000
Deferment Rate	6%	6.5%	8%

Value of Existing and Extended Leases

11. In arriving at his valuation of the existing lease, Mr Ryan took into account seven sales, effected between June 1997 and December 1998, of other flats in Weymouth Street and nearby Devonshire Street, Beaumont Street and Marylebone High Street. The unexpired terms of the leases concerned ranged from 26 to 38 years and the prices paid from £99,000 to £114,750.
12. When applying the evidence of these sales to the subject property, Mr Ryan made a number of adjustments. He deducted 10% to reflect the fact that in most cases the price paid on the open market included an element of "hope value" for the possibility of extending the lease, whereas this possibility must be disregarded for the purposes of the 1993 Act. He deducted 5% from three of the sale prices, as they included new or good quality items such as carpets, curtains, kitchen equipment and light fittings. In order to reflect the differences in date, he adjusted the resultant figures by using the FDP Savills Residential Research Statistical Supplement dated April 1999. He did not make an additional allowance for what he considered the relatively small growth in values between March 1999 - the latest figures in the Supplement - and the valuation date. Finally, he adjusted the prices to take account of the different lease lengths by reference to relativity tables based on a detailed history of extended lease and freehold settlements negotiated by Gerald Eve in conjunction with John D Wood & Co.
13. In considering the value of the proposed extended lease for 122 years, Mr Ryan had regard to the sale of 11 one bedroomed flats in nearby Marylebone Street, Harley Street, Upper Wimpole Street, Devonshire Street, Luxborough Street and Marylebone High Street between May 1997 and March 1999. The unexpired terms varied from 52 to 109 years and the prices between £148,000 and £275,000. Again, a number of adjustments were made to the prices achieved to reflect differences compared with the subject property. He deducted 10% from the prices of brand new flats because of many purchasers' preference for such units and 2.5% where some element of the price was attributable to fixtures and fittings. Differences in sale date were again adjusted by reference to the FDP Savills index and differences in lease length in accordance with the Gerald Eve and John D Wood & Co relativity table.
14. Mr Ryan considered that the subject property was better in terms of style and location than some of the comparables and worse than others. In his opinion, only one of the 18 comparables, the 35 year lease of 23 Melcombe Regis Court, Weymouth Street, was "roughly on a par" with the subject property.
15. In Mr Ryan's opinion, the value of the existing lease was £110,000 and that of the extended lease was £190,000. These values are, respectively, 4.35% less and 5.55% more than the figures determined by the LVT. However, the accuracy of Mr Ryan's valuations depends, firstly, on the accuracy of the various adjustments he has made to the sale prices of the comparables and, secondly, upon the reliability of his opinions as to the respective merits of those comparables and of the subject property. In arriving at his views on the latter, and in making adjustments for the values of fixtures and fittings, Mr Ryan has suffered from a significant disadvantage, namely that he has only inspected internally two of the seven comparables sold with a short lease and four of the eleven long leasehold comparables. In making his adjustments, therefore, Mr Ryan has inevitably had to rely on hearsay information concerning the interiors of two-thirds of the comparable flats. Such reliance on others does not necessarily mean that a valuation prepared by an experienced surveyor like Mr Ryan is of no assistance. In this case, however, the onus is on the appellant - and its expert witness - to show that the values arrived at by the LVT were wrong. That onus is not easy to discharge where, as here, the suggested margin of error is small and in my judgment Mr Ryan has failed to discharge it. I therefore accept the LVT's value of £115,000 for the existing lease and £180,000 for the extended lease.
16. I should add that the respondent suggested that the best evidence of the value of the existing lease was provided by the sale of Flat 10 Carisbrooke Court for £130,000 on 24 March 1999. He produced a letter signed by the former owner, confirming that the sale price of those premises was arrived at "through an arm's length transaction at their market value". Although an estate agent had been instructed to offer the property for sale in 1997 or 1998, those instructions had been withdrawn and the respondent was not aware that the property was being marketed prior to the sale in 1999. It was not clear whether the sale price included furniture and, since the vendor was not a surveyor, I am unable to place any reliance on his opinion that the sale price represented the fair market value of the flat at the date of sale. I do not obtain any assistance from this transaction.

Deferment Rate

17. Mr Clark said that, in choosing the deferment rate, it was important to have in mind the underlying factors which would influence how the freeholder's reversion in the subject property would be regarded as an investment opportunity compared to others available on the market. The choice of deferment rate was a reflection of risk and the capital appreciation that the investor anticipated the property would experience over the long term. These matters were in turn influenced by a number of factors, including the property's nature and quality (including its lease covenants); its location; the current and anticipated market demand for that particular class of property in that location, as compared to the supply; and the underlying economic factors.
18. Whilst the well-maintained nature of Carisbroke Court, the fact that the lessee was responsible for a proportion of all the costs of maintaining the building, and its location in a popular part of central London with very good facilities would indicate good prospects for capital growth in the long term, the resurgence that Marylebone High Street had experienced recently pointed to an even greater potential for growth. This was likely to render properties in this area as attractive, if not more attractive, to an investor than those in other equally well located areas such as Mayfair, Belgravia, Knightsbridge and Kensington and Chelsea. This resurgence had largely been the result of a programme of revitalisation instigated by the appellant with the object of raising the profile of the area by attracting high quality retailers. This in turn would attract more affluent residents, with a resultant greater demand for residential accommodation in the area.
19. Mr Clark considered that a well informed investor considering the purchase of the freehold reversion of the subject property would anticipate strong growth in capital values in response to the increased demand for residential accommodation in the area. In the short to medium term such an investor might take the view that growth rates in this locality would outstrip other areas of central London as the area experienced a period of transition, with growth rates settling back in the longer term to those consistent with those other areas.
20. Finally, and notwithstanding these local characteristics, the property market as a whole was strongly influenced by the underlying health of the economy. Despite some temporary setbacks there had been a long term trend for values of residential property, especially those in central London, to appreciate. It was also widely recognised that there would in the future be a shortage of supply of residential accommodation compared to demand, especially for one and two bedroomed dwellings, as the number of households increased but family sizes fell as a result of demographic change. This pressure was being felt particularly in London and the South East.
21. Mr Clark also produced an article published in the Estates Gazette on 17 May 1997, on the subject of the attractions of investing in private rented residential property. This suggested that such property had outperformed all the other classes of property investment over the previous two years and had been the best performing sector in 5 of the previous 15 years in terms of total return.
22. In support of his suggested yield of 6%, Mr Clark produced details of 21 premiums agreed for extended leases on the Howard de Walden Estate under the 1993 Act and 25 enfranchisement prices agreed for houses on the estate under the Leasehold Reform Act 1967 as amended. He also produced an analysis of the premiums agreed for the surrender and re-grant of leases of 5 flats at 60/60A Portland Place and 11A Weymouth Street. In each case the analysis showed a deferment rate of 6%. In addition, Mr Clark referred to a decision of the LVT dated 7 May 1998 relating to premiums payable for extended leases of various flats in 88 Portland Place, where the decision was based on 6%, and to details of prices paid and rack rents obtained in late 1996/1997 for three flats in Longford House, 23A Wimpole Street. He said that the rents achieved reflected net yields of 4.64%, 5.75% and 7.17%. The latter two figures overstated the return to the extent that, unlike the sale prices, the rents included furniture. His final comparable was the agreed premium for an extended lease of flat 15 Basildon Court, 28 Devonshire Street. This had been the subject of a decision by the LVT incorporating a capitalisation and deferment rate of 7%. The subsequent appeal to this Tribunal had been settled by consent at a higher figure, which Mr Clark said was based on a capitalisation and deferment rate of 6%.
23. Mr Clark concluded:

"As can been seen from all this evidence, a deferment rate of 6% has been applied consistently to a variety of different residential properties in different locations on the Estate ranging from apartments in the grand buildings fronting Portland Place to smaller flats and houses on the periphery of the Estate, such as Basildon Court or in Beaumont Street. It is therefore my opinion that an investor, having regard to the prospects of capital growth for residential properties in the locality of the subject property, compared to other similarly well located areas in central London, and also having regard to the deferment rate of 6% applied consistently across the Howard de Walden Estate, will bid for the freeholder's reversion at a value based on a deferment rate of not more than 6%".

24. In support of the evidential value of the settlements negotiated by Mr Clark's firm in good central London locations, he referred to the decisions of this Tribunal in Lloyd-Jones v Church Commissioners for England (1981) 261 EG 471, Cadogan Estates Limited v Hows & Another [1989] 48 EG 167 and to a more recent decision of the LVT, issued in 1996, on the price payable for the collective enfranchisement of 36/37 Eaton Mews South, SW1.
25. The respondent again relied on only one comparable to support his contention that the LVT's deferment rate of 6.5% was either correct or too low. This related to 4 Weymouth Court, 1 Weymouth Street, in respect of which the LVT had determined the price payable for a new lease. The parties had agreed that the value of the existing 47 year lease was £306,850 and the only dispute was as to the value of the new 137 year lease at a peppercorn. The valuations of the respective experts were £400,000 and £463,1000. The relevance of this decision was that the capitalisation and deferment rates had both been agreed by the parties at 8%, the valuation date being 20 July 1999.
26. As I indicated during the course of the hearing, there seems to me to be an inconsistency in Mr Clark's approach to the appropriate deferment rate. On the one hand, he suggested that the rate depended, among other factors, upon the current and anticipated demand for the type of property in question and on the underlying health of the economy. On the other hand, the settlements negotiated by his firm failed to take these matters into account. The valuation dates for Mr Clark's settlements ranged from June 1981 to April 1999. As he pointed out, in this period of nearly 18 years the central London residential market had suffered setbacks "such as the experience of the early 1990s" and had "performed particularly well during the 1980s and commenced a more obvious recovery from the beginning of 1993 than most other parts of the country." Despite the considerable differences in the prospects of future growth which must have existed between these market extremes, the deferment rate was apparently always agreed at the same rate of 6%.
27. Mr Clark suggested that, taking a long-term view, the residential market had shown consistently sustained growth and it was this growth which had supported the consistent yield of 6%. I cannot accept that explanation. In my judgment the appropriate yield at any time depends upon the market's perception of risk and future capital appreciation at that time. If residential values have fallen and this trend seems likely to continue, investment in such property becomes more risky and the prospects of future growth less certain. Investors, therefore, will require a higher return if they are to be persuaded to invest in that particular market than when the future prospects are far more encouraging.
28. Against that background, I am of the view that the settlement evidence relied upon by Mr Clark must be considered with care. With one exception, to which I shall refer later, there was no evidence that the deferment rate had actually been agreed by the tenants at 6%. Moreover, the tenants had been represented in six of the settlements by either Messrs Conrad Ritblat or Messrs Langley Taylor, the same surveyors who had agreed a deferment rate of 8% for 4 Weymouth Court. Weymouth Court is situated two doors away from one of Mr Clark's 6% settlements, 9 Weymouth Street, where the valuation date was 9 September 1998 - some 10 months before that of 4 Weymouth Court. Mr Clark commented on the latter as follows:

"Weymouth Court is located just outside the eastern boundary of the Estate. I have to say that I consider the yield of 8% to be high given the settlement evidence on the Estate".

29. Elsewhere, Mr Clark referred to settlement evidence negotiated by his firm in these terms:

"I believe that such evidence of the land market should be followed unless it is contradicted by stronger evidence from the land market which is directly relevant to one or more particular case."

In my opinion the reversionary rate of 8% agreed for 4 Weymouth Street by surveyors with experience on the Howard de Walden Estate is of greater weight than the settlement evidence, where apparently not one tenant's surveyor has been prepared to confirm his agreement to a rate of 6%.

30. I consider that the history of the settlement of the appeal on 15 Basildon Court is instructive in this connection. This is the only settlement produced by Mr Clark where a rate of 6% was agreed in writing on behalf of the tenant. On 21 April 1999 the landlords' solicitors wrote to the tenant's solicitors making the following offer, without prejudice save as to costs:

"On behalf of our client we hereby offer to compromise the pending appeal on the following terms:-

a) That the amount of the premium to be paid by your client for the new lease of the above flat should be £57,300, rather than the figure fixed by the Leashold Valuation Tribunal namely £52,615 and

b) that each party is to bear its own costs in relation to this appeal to date.

We enclose our client's surveyor's valuation showing how the said settlement figure of £57,300 has been calculated. Please note that for the purposes of this Calderbank offer the vacant possession values determined by the Tribunal are not disputed and the diminution in the value of our client's interest has been calculated by reference to a capitalisation rate of 6% and a yield rate of 6%."

On 17 May 1999 the tenant's solicitors replied:

"Our client is willing to compromise the appeal ... on the terms set out in your letter of 21 April 1999."

31. In reply to a question from me, Mr Clark frankly admitted that a properly advised tenant would have accepted this Calderbank offer, even if his surveyor had considered that the 6% yield rate was too low, if there had been a risk that the benefit of securing a higher yield on appeal would be offset by a change in another element of the valuation, such as the marriage value. It follows from this concession that the only reliable evidence to be derived from this settlement is provided by the amount of the premium itself. In my judgment, the same consideration applies to all the other settlement evidence produced by Mr Clark, where not one surveyor acting for a tenant has provided written confirmation of his agreement to a particular yield.
32. I have not overlooked Mr Clark's reference to previous decisions of the LVT and of this Tribunal, where weight has been placed on settlements negotiated by his firm for houses and flats in central London. As Members of this Tribunal have pointed out repeatedly, its decision in any particular case must be based solely on the evidence adduced in that case. In the words of Hoffman J in Land Securities Plc v Westminster City Council [1992] 44 EG 153:

"In principle the judgment, verdict or award of another tribunal is not admissible evidence to prove a fact in issue or a fact relevant to the issue in other proceedings between different parties."

The wisdom of this rule is apparent from a brief consideration of three of the decisions upon which Mr Clark particularly relied.

33. The most recent was that of the LVT in 1996 in respect of the collective enfranchisement of 36/37 Eaton Mews South. In that case, the valuation expert witness for the freeholder was Mr Clark's colleague, Mr Macpherson. He relied strongly as evidence of the land market in Belgravia on the calculations prepared by his firm in support of the negotiated enfranchisement prices for 144 houses on the Grosvenor and Cadogan Estates. In its decision, the LVT said:

"As a Tribunal we have been much exercised as to the evidential value of these settlements. Mr Radevsky on behalf of the nominee purchaser makes a strong case against them...

Against these weighty arguments, we have the authority of two decisions of the Lands Tribunal; they relate to properties under the ownership of the same reversioner who appears before us and the Lands Tribunal approved as evidence the calculation sheets made by Mr Macpherson's former partner in the Lloyd-Jones case and by Mr Macpherson himself in the Hows case... the factual position cannot be ignored that over a period of 15 years a rate of 6% was consistently applied for capitalisation and deferment of settlements relating to 20 to 30 year leases, and sums paid for enfranchisement to the Estate were calculable on that basis. As there were no other sales these transactions, even if conducted in an unusually consistent manner, effectively represented in fact the local land market. On balance, and mindful that we are an inferior Tribunal to the Lands Tribunal, we consider for the purposes of transactions arising on the same Estate and in relation to the same type of enfranchisement that we must accept in this case the negotiated settlements as evidence. This decision in no way determines the evidential value of settlements when applied to different estates, different landlords and different areas of London."

34. In Lloyd-Jones, the valuation experts were Mr Hopper for the landlord and Mr Hewitt for the tenant. In his decision the Member (Mr W H Rees FRICS) said:

"Mr Hopper's calculation of the value of the reversion in stage A was substantiated by reference to 57 enfranchisement prices settled under section 9 (1A) in respect of houses on the Grosvenor and Cadogan London Estates. Full details of the calculations used were put before me: they were on the same lines as Mr Hopper's valuation above. In almost all cases the percentages used were 10% for the deduction and 6% for the deferment. On the other hand, Mr Hewitt's use of 10% for deferment was unsupported by reference to any transaction."

35. In Hows the Tribunal comprised Mr W H Rees FRICS and Dr T Hoyes FRICS and the respective experts were Mr Strathon (Mr Macpherson's partner) for the freeholder and Mr Boston for the lessee. Dealing with the decapitalisation and capitalisation rates, the Tribunal said:

"The difference between the parties, basically whether 6% (freeholder) for both exercises or 7% (lessee), can be dealt with more briefly, since essentially the freeholder relies upon the evidence of the settlements and the lessee upon the practice of this tribunal and leasehold valuation tribunals in previous cases. Mr Strathon produced in evidence 330 settlements, 134 under section 9 (1) and 196 under section 9 (1A), where, almost without exception, 6% had been used. Mr Boston used 7% in his valuation because he regarded that as the normal rate adopted by this tribunal despite the fact that he had been concerned in negotiations on behalf of lessees in respect of three of the section 9(1A) settlements at 6% produced by Mr Strathon."

36. Thus, the LVT's decision to accept the settlement evidence in connection with 36/37 Eaton Mews South was heavily influenced by the decisions in Lloyd-Jones and Hows. In the former case the lessee's support for a yield in excess of 6% was non-existent. In Hows, its support consisted of previous tribunal decisions, which were inadmissible. Moreover, the valuation of the tenant's expert was inconsistent with valuations which he had previously agreed elsewhere on the estate. The decisions of the Tribunal to accord substantial weight to the settlements, therefore, are entirely understandable, but those decisions do not constitute admissible evidence for the purposes of the present appeal.
37. I have concluded that the 6% deferment rates which appear in all the settlement valuations referred to by Mr Clark are not agreed figures, but merely one possible analysis of the agreed capital sum in each case. Mr Clark also relies on the rental returns achieved by the purchasers of the flats in Longford House. I derive no assistance from this evidence. In each case, an important concern for the investor was the immediate rental income to be obtained by letting the property at market value shortly after completion of the purchase. No doubt the prospect of future capital appreciation would have been another factor to be borne in mind, but it was not the purchaser's overriding concern, which it would be for an investor interested in acquiring the reversion to the appeal property. The appellant has therefore not demonstrated that the deferment rate of 6.5% determined by the LVT was wrong and, since there is no cross- appeal, it is not necessary for me to decide whether a rate in excess of 6.5% is justified. The appeal fails. I find that the premium payable to the appellant for the new lease of the appeal property is £44,150.
38. What I have said so far concludes my determination of the substantive issues in this case. It will take effect as a decision when the question of costs is decided and at that point, but not before, the provisions relating to the right of appeal in section 3(4) of the Lands Tribunal Act 1949 and Order 61 Rule 1(1) of the Civil Procedure Rules will come into operation. The parties are invited to make submissions as to the costs of this appeal and a letter accompanying this decision sets out the procedure for submissions in writing.

Dated:

(Signed) N J Rose FRICS

ADDENDUM ON COSTS

39. I have received written submissions on costs. The respondent asks for his costs, which he quantifies at £7,728.75. The appellant says that it has no observations to make in relation to its own costs, but it does not agree the amount of costs suggested by the respondent and asks that these be assessed.
40. This Tribunal has discretion to settle the amount of costs payable by fixing a lump sum. In view of the limited information which has been provided about the respondent's costs, however, and the appellant's disagreement with the amount claimed, I do not consider that such a course would be appropriate in this case. The appellant will pay the respondent's costs of the appeal. Such costs are to be agreed or in default of agreement assessed on the standard basis by the Registrar of the Lands Tribunal in accordance with the Civil Procedure Rules.

Dated:

(Signed) N J Rose FRICS

Appendix 1

Flat 7, Carisbrooke Court, 63-69 Weymouth Street, London W1

Valuation of J M Clark BSc ARICS

			£	£	£	£
A)		Diminution in Value of Intermediate Leaseholder's Interest - agreed (equals value of existing interest)			510
B)		Diminution in Value of Freeholder's Interest
	a)	Value of Freeholder's Existing Interest on Reversion
		(Assuming no headlease rent reduction)
		Reversion to value of freehold in possession
		Value of lease with 121.83 years unexpired @ peppercorn rent	190,000
		Uplift to value of freehold equivalent by 2%	193,800
		Freehold equivalent say	194,000
		Defer 31.83 years @ 6%	0.1565
				30,361
	b)	Value of Landlord's Proposed Interest
		Reversion to value of freehold in possession	194,000
		Defer 121.83 years @ 6%	0.00083
				161
	c)	Diminution in Value of Freeholder's Interest			30,200
C)		Diminution in Value of Landlords' Interests				30,710
D)		Calculation of Marriage Value
	a)	Value of Proposed Interests
		Freeholder's		161
		Intermediate Leaseholder's		Nil
		Tenant's (lease for 121.83 years)		190,000
	b)	Value of Existing Interests			190.161
		Freeholder's		30,361
		Intermediate Leaseholder's		510
		Tenant's		110,000
					140,871
	c)	Marriage Value			49,290
		Attributed to Landlord @ 50.00%				24,645

			£	£	£	£
E)		Enfranchisement Price				55,355
F)		Landlord's Other Losses				nil
G)		Premium Payable Say				55,350
H)		Apportionment of Marriage Value between Freeholder and Intermediate Leaseholder
	a)	To Intermediate Leaseholder
		24,645 X	510 30,710	=	409
	b)	To Freeholder
		24,645 X	30,200 30,710		24,236
						24,645
I)		Apportionment of Premium between Freeholder and Intermediate Leaseholder
	a)	To Intermediate Leaseholder
		Diminution in value of interest		510
		Share of Marriage value		409
		Other losses		Nil
				919
		Say			900
	b)	To Freeholder
		Diminution in value of interest		30,200
		Share of Marriage Value		24,236
		Other Losses		Nil
				54,436
		Say			54,450
						55,350

Appendix 2

Flat 7, Carisbrooke Court, 63-69 Weymouth Street, London, W1

LVT Decision

				£	£	£
A)		Diminution in Value of Intermediate Leaseholder's Interest - agreed			510
B)		Diminution in Value of Freeholder's Interest
		Value of Freeholder's Existing Interest on Reversion
	a)	(Assuming no headlease rent reduction)
		Reversion to value of ferehold in possession
		Value of lease with 121.83 years unexpired @ peppercorn		180,000
		Uplift to value of freehold equivalent by 2%		183,600
		Defer 31.83 years @ 6.50%		0.1346 24712
	b)	Value of Freeholder's Proposed Interest
		Reversion to value of freehold in possession		183,600
		Defer 121.83 years @ 6.50%		0.0004674 86
	c)	Diminution in Value of Freeholder's Interests			24626
C)		Diminution in Value of Landlords' Interest				25136
D)		Calculation of Marriage Value
	a)	Value of Proposed Interest
		Freeholder's		86
		Intermediate Leaseholder's		nil
		Tenant's( lease for 121.83 years)		180,000	180,086
	b)	Value of Existing Interests
		Freeholder's		24,712
		Intermediate Leaseholder's		510
		Tenant's (lease for 31.83 years)		115,000
					140,222
	c)	Marriage Value			39,864
		Atrributed to Landlord @ 50%				19932

			£	£	£	£
E)		Enfranchisement Price				45,068
F)		Landlord's Other Losses				nil
G)		Premium Payable
		Say				45,050
H)		Apportionment of Marriage Value between Freeholder and Intermediate Leaseholder
	a)	To Intermediate Leaseholder	19932 X	510 25136	= 404
	b)	To Freeholder
			19932 X	24626 25136	= 19,528
						19,932
I)		Apportionment of Premium between Freeholder and Intermediate Leaseholder
	a)	To Intermediate Leaseholder
		Diminution in value of interest		510
		Share of marriage value		404
		Other losses		Nil
				914
			Say		900
	b)	To Freeholder
		Diminution in value of interest		24626
		Share of marriage value		19528
		Other losses		Nil
				44154
			Say		44150
						£45050