Brickfield Properties Limited v Soil Miah Ullah & Ors

In valuing a short leasehold interest for leasehold enfranchisement, the tribunal must consider all available evidence and then assess how the evidence fits together. A sale of the subject property, an auction sale and relativity graphs may each provide relevant evidence. An auction sale does not automatically prevail over competing evidence. Where two sales occur within a short period at substantially different prices, the tribunal must assess the reliability and circumstances of each transaction. A transaction which is consistent with specialist relativity graphs may be preferred where the circumstances of a later auction are opaque. The value should then be adjusted to remove the value of statutory enfranchisement rights and to account for tenant’s improvements.

The appeal concerned the premium payable by tenants seeking a new lease of a flat under the Leasehold Reform, Housing and Urban Development Act 1993. The First-tier Tribunal determined the premium at £128,774, valuing the existing 16.23-year lease principally by reference to a sale at auction for £175,000, after adjustments for tenant’s improvements and statutory rights.

The property had been sold privately two weeks earlier for £112,000. The parties also relied on Savills and Gerald Eve relativity graphs. The landlord appealed the FTT’s determination of the existing leasehold value. The central issue was which evidence provided the more reliable indication of market value.

1. Appeal allowed. The Tribunal substituted a premium of £153,498 for the FTT’s figure of £128,774.
2. Valuation required consideration of all available evidence, followed by an assessment of how the evidence fitted together. The Tribunal identified three relevant pieces of evidence: the private treaty sale, the later auction sale and the relativity graphs.
3. Neither sale was reliable in isolation. The private treaty sale had the advantage of being a sale of the subject property at the valuation date. The auction sale was also potentially relevant, but its surrounding circumstances were insufficiently clear. The Tribunal could not determine whether the first purchaser had bought below market value or whether the tenants had overpaid at auction.
4. The FTT had erred by focusing solely on the auction sale. Allen v Leicester City Council [2013] UKUT 016 (LC) established that an auction was a recognised method of achieving open market value, but did not require an auction sale to prevail against all competing evidence.
5. The first sale, after deduction for tenant’s improvements and adjustment for statutory enfranchisement rights, produced an existing leasehold value of £85,982. That figure generated a relativity of 31.46%, consistent with the average of the Savills and Gerald Eve unenfranchisable graphs. It was therefore more likely to reflect market value than the auction price.
6. The Tribunal applied the resulting figure to the FTT’s uncontested calculations. It considered remittal disproportionate because sufficient material was available to determine the issue itself.

• First-tier Tribunal (Property Chamber): determined the premium at £128,774 on 20 April 2021, principally relying on the auction sale.
• Upper Tribunal (Lands Chamber): allowed the appeal on the existing leasehold valuation and substituted a premium of £153,498.