Kosta v Trustees of the Philimore Estate [2014] UKUT 0319 (LC) Gary Cowen appeared for the successfu
In this long-awaited appeal, Gary Cowen appeared for the successful Respondent landlord. The principle issue in the appeal concerned relativity, the relationship between the value of a freehold property and its value on a leasehold term which forms an essential part of the valuation exercise required for leasehold enfranchisement including collective enfranchisement and individual lease extensions. In seeking to determine the value of a 52.45 year leasehold interest by comparison with the freehold interest of the same property, the Appellant lessee sought to adduce the expert evidence of an econometrist who justified his relativity by reference to a hedonic regression analysis, a statistical analysis of over 8,000 market transactions from the period 1987 to 1991, prior to the commencement of the Leasehold Reform Housing and Urban Development Act 1993. Whilst the Tribunal was prepared to find on a balance of probabilities that the analysis reflected relativity during the period 1987 to 1991, they rejected the evidence as being appropriate to reflect the market at the valuation date in October 2011. In particular, the Upper Tribunal accepted that because the 1993 Act postulates an assumption for the purposes of the valuation that the subject property carries no right to enfranchise under the 1993 Act but that other similar properties in the market do carry such rights, that would have a significantly negative impact on the existing lease which would render the results from the statistical analysis to be potentially flawed. In addition, the Upper Tribunal recognised differences in the market between 1987 to 1991 and 2011 which would call the results into question. The Upper Tribunal preferred the Respondent’s reliance on the published graphs of relativity, noting that anyone seeking advice as to the premium to be paid at the valuation date would have received such advice based on those graphs.
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