Neville v Cowdray Trust Ltd & Anor

For the purposes of determining whether a tenancy is at a low rent under section 4A of the Leasehold Reform Act 1967, “the property” is identified by reference to the hereditament or hereditaments whose rateable value was shown in the valuation list at the relevant time. Where the property comprised more than one hereditament at the commencement of the tenancy, their rateable values are aggregated under section 25(1) of the Rent Act 1977. A later conversion into a single dwelling does not postpone the relevant date or substitute the later rateable value. The statutory wording governs, even where the conversion was required by the lease and the result appears harsh.

The claimant held a long lease of premises originally comprising two semi-detached cottages. The lease required their conversion into a single dwelling house. The cottages each had a rateable value of £21 when the tenancy commenced, while the converted dwelling first appeared in the valuation list on 9 August 1967 with a rateable value of £158.

The claimant sought a declaration that she was entitled to acquire the freehold under Part 1 of the Leasehold Reform Act 1967. The county court held that the property had no rateable value at the commencement of the tenancy because the converted dwelling did not then exist. The landlords appealed. The central issue was whether “the property” in section 4A(2) meant the premises initially demised, comprising two cottages, or the later converted dwelling.

1. Appeal allowed. The tenancy did not satisfy the alternative low-rent conditions in section 4A. At the commencement of the tenancy, the property had a rateable value of £42 and the rent of £100 was not less than two-thirds of that amount.

2. Section 4A(1) sets out the relevant conditions for the alternative low-rent treatment. The tenancy satisfied the temporal and rateable-value conditions, but failed the condition concerning the rent payable during the initial year.

3. Section 37(6) of the Leasehold Reform Act 1967 applies section 25(1) of the Rent Act 1977 to ascertain the rateable value of “the property”. Section 25(1) directs attention to the hereditament or hereditaments for which a rateable value is shown in the valuation list. Under section 25(1)(b), where the property consists of or forms part of more than one hereditament, the relevant value is found by proper aggregation or apportionment.

4. At the tenancy’s commencement the premises consisted of two hereditaments, each with a rateable value of £21. Their aggregate value was therefore £42. The absence of the eventual single dwelling from the valuation list at that date did not mean that the property’s rateable value was nil.

5. The later conversion did not alter that analysis. The wording of section 4A differs from the wording of the original section 4, and the question is one of statutory construction rather than construction of the lease. The statute makes no distinction between a conversion required by the lease and a voluntary conversion. The reasoning in Dixon v Allgood, [1987] 1 WLR 1689, supported careful attention to the statutory language and showed that the later existence of a converted house did not change the valuation analysis.

6. General appeals to fairness or broad justice could not overcome the statutory wording. The county court’s declaration was set aside and the appeal was allowed.

• Court of Appeal (Civil Division): Appeal from the Chichester County Court allowed on 5 May 2006.
• Chichester County Court: By judgment dated 19 May 2005, His Honour Judge Robin Barratt QC held that the claimant was entitled to acquire the freehold and gave permission to appeal.