First Tier Tribunal (ex LVT) Expected Costs

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    First Tier Tribunal (ex LVT) Expected Costs

    A charity in which I am involved owns a freehold house on which the tenants have correctly served notice to enfranchise. We have agreed a price (over £100k) but since then their solicitors have gone silent for several months, despite our chasing.
    We have threatened to go to First Tribunal (Property) if they do not complete but no success yet.
    Is anyone able to advise what our costs are likely to be if we go to Tribunal (as I believe both sides are liable for their own costs)? And if we go to Tribunal, get a price set, but then they still do not complete, can we then reclaim our Tribunal costs from them?

    #2
    Why do you want to go to the First Tier Tribunal ?

    They have asked to enfranchise, and if they don't want to take it any further, then they don't.

    You cannot force anyone to buy / enfranchise.
    You can't force anyone to buy your car when they ask how much it is and they will call round Friday and pay you but don't turn up. Do you take them to a tribrunal ? no you don't.

    Comment


      #3
      Maybe they dont have the 100K to pay.

      Comment


        #4
        Then they won't reply and no one can force them to reply, as per post number 2.

        Unfortunate for the person asking the question, but that's life.

        Comment


          #5
          ram,

          Unfortunately it is a bit more complicated (and legal) than offering to buy a car.
          When the tenant applies to enfranchise, the freeholder (the charity in this case) is forced to start incurring costs, and the tenant who has applied is liable for those costs whether he goes ahead with the purchase or legally withdraws.
          Even more importantly, if the tenant does not legally withdraw (paying the freeholder's costs), he can revive the enfranchisement at any time and crucially the valuation of the freehold is calculated as of the date he first applied.
          In our case, property prices have risen by more than 20% since he first made the application and, roughly, that means that the cost of the freehold has also risen by 20% (actually a bit more because the lease is now shorter). In other words, we have agreed a price of £130k, but if the identical house next door were to apply today, the price would be around £170k.
          If he withdraws, he has to start again, at the current, much higher, price. If he doesn't. then even if the market value of the freehold rises to £1 million, he can revive his claim at any time and pay just £130k.
          Unfortunately the only way we can force him to either withdraw or go ahead (rather than just keep the right to buy the freehold at around £130k for ever) is to apply to the Tribunal. I hope that explains my question.

          Comment


            #6
            You could always take it to auction. That may spur them on.

            Comment


              #7
              But isn't the enfranchisement claim deemed to have been withdrawn if not completed within a certain length of time? A matter of months iirc.
              After deemed withdrawal I thought the process had to be started again and not before another two years had lapsed which I assume means a new claim and revaluation and, new costs.

              Comment


                #8
                Response time by either side should be within 2 months from last letter. Enfranchisement is always difficult if one or two in the group can't raise the money for their contribution.

                Comment


                  #9
                  Gordon999,

                  I was advised otherwise by our solicitor. In fact I was specifically told there is no time limit and the leaseholder can reactivate the claim at any time unless he has officially withdrawn it. It would be great if someone could confirm that our solicitor is incorrect?

                  Comment


                    #10
                    MickyV,

                    You say as property prices have increased 30 percent the freehold price will have increased by the same.

                    However isn't the freehold value mainly based on ground rent, which will not have increased in line with leasehold prices.

                    So, you would only see a 'marriage value' rise. What length are the leases??

                    Comment


                      #11
                      Thanks, andybenw,

                      If it was a Section 9 (1) valuation, you would be correct: much would depend on the ground rent.

                      However, this is a Section 9 (1A) valuation [also called Special Valuation Method, for high value properties], so the ground rent is almost irrelevant: the valuation is all about Reversion to Value, which basically follows the market value.

                      The lease has about 60 years left and the property is worth around £1.75 million, so the stakes are quite high.

                      Also the charity is a "real one": none of us gets paid and all the money we receive is used to provide grants for education to those who otherwise couldn't afford it for various reasons. Getting the money in would mean we can help more children. I know this is totally irrelevant to this thread and this forum but I hope it helps to explain why we would like to get this resolved.

                      Comment


                        #12
                        I hate wading in on these but if I recall, the notice lapses one month after the offer is made, but he is still on the hook for costs, where the tenant does not give notice to withdraw or does not proceed.

                        I don't think that you are stuck on the price as the offer has lapsed. Send them the bill
                        Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

                        Comment

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