The following are the most memorable enfranchisement settlements of 2021 I have had the pleasure to have been instructed on:-
Collective enfranchisement of 3 flats with garaging in Belgravia.
Here I acted for the lessee who owned the former coach house of the Duke of Wellington that was converted into flats in 1960’s (where the original ‘horse staircase’ is still in situ as the stables were on the first floor with the coaches parked on the ground floor) .
The premium was settled at 59% discount off the landlord’s quoting premium.
Collective enfranchisement of a block of 25 flats in Clerkenwell.
Here I acted for 19 of 23 qualifying lessees (2 participating lessees owned 2 original but now adjoined flats,4 lessees not participating) wanting to acquire the freehold under 1993 Act.
The building was unusual in that it was a former ink factory with high ceilings and huge windows to which the freeholder converted to residential use by providing common parts, passenger and car lifts, and a new penthouse floor with barrel vaulted roof 4 four units.
The freeholder provided each lessee with a shell, many split level, of 4 walls, a front door and services to each close to the front door and two drainage points. It was up to each lessee to make each unit into a New York style loft apartment as each saw fit.
It was fascinating to see the different styles of loft that each lessee had created since 1993 (when the units were sold on 125 year leases) and from a valuation point of view – the added degree of improvement value disregard which I approached from two angles.
a) to start by assessing the values, as at the valuation date, from actual evidence of sales in the building and other loft style flats nearby together with painstaking interviewing local agents to reach an underlying freehold unit rate £psf per floor in repair.
Having done this:
b) to take the purchase price that each lessee paid in respect of the 19 participating flats as at the grant of the leases (for each shell as I remembered visiting the building when launched back in 1993) and index that forward to the valuation date.
The difference between the two produced the improvement value discount which was settled with the landlord’s valuer at 40% discount.
Extension of lease under LRHUDA 93 → voluntary sale of freehold of a mews house in Pimlico
Acting here for the freeholder, the issue here was the house had a vault situated under the rear extension kitchen that was only accessible through the property at the rear. The vault was not part of the lease. The house could not be enfranchised under LRA 67 as it failed the test under section 2(2).
From the lessee’s perspective, his aim was to acquire the freehold based on the ‘cheap’ section 9(1) basis. The alternative route was to obtain a 90 year extended lease (where the landlord would receive 50% of the resulting marriage value as opposed to a site value proportion only) provided the price paid came to equivalent to that of buying the freehold under s9(1). The lessee served 2 notices without prejudice to each other. The freehold notice was denied.
The case settled the day before the virtual hearing before the tribunal.
The settlement premium worked out approx. 70% higher than the premium my client would have received if he had lost the freehold under 1967 Act.
Despite the tenant’s valuer attempting to lower the premium payable compared to that originally offered on the s42 notice by approx. 44%; the landlord settled for a premium just over 23% lower than what I asked the tribunal to find compared to the tenant’s case that the premium the tribunal should find be just under 70% lower!