It is extraordinary how life comes round full circle. I well remember visiting this 1930’s Art Deco former commercial mill building but last occupied by an ink printing works in 1993 when first marketed by the developer freeholder with the novel idea of selling 125 year long residential leases on 25 shells flats for each incoming buyer to create individual New York loft style finishes to their own individual requirements and being completely ‘wowed’ with the idea.
The proposed lofts offered big space – whether with huge floor to ceiling height or wide (& where two original proposed units had been adjoined to create even larger single lofts than originally envisaged.) Many were arranged with internal galleried mezzanine floors thus accentuating the sense of height amplified by a higher ratio of window to wall to floor space for a residential building than is normally found. There were also 4 newly created 4th floor penthouse shells with barrel-vaulted roof each with a private roof terrace offering panoramic skyline views.
The landlord provided each unit with necessary party division walls, a front door and full services. It was up to the lessees to fit out as they each saw fit and stamp their own style on each loft.
27 years later, it has been fascinating to see how each original lessee finished off each loft and where of course some had been updated by later incoming purchasers. The styles of each loft varied between throw backs to 1950’s style kitchen finishes to highly modern minimalist finishes.
From my perspective, the most important issue was the question of improvement value disregard discount given the landlord did not create finished flats per se – just 4 walls, windows (& a new barrel-vaulted roof in the case of the penthouse flats) and each with a front door.
In the end, the discount was settled at a blanket across the board 40%. On the one hand this reflects a greater discount than usual to get back to an in repair finish given the starting point of shell flats as opposed to in an in repair condition yet on the other hand reflect the passage of nearly 30 years of wear and tear.
Another way of looking at this settlement is to contrast the result to an underlying site value as required in valuations under s9(1) of the 1967 Act. The last decision I am aware of in concluding to a site value percentage of entirety value (i.e.: the most valuable building that could reasonably be expected to be built on a site) in PCL was 55%. Given we settled here at 60% of notional freehold value for each participating loft in repair – this is indeed a very good result indeed especially as there is no statutory disregard for tenant’s improvements under s.9(1).