Summary

For the purposes of a leasehold enfranchisement valuation under the Leasehold Reform Act 1967 s.9, hope value could not, as a matter of law, be included as an element in the valuation of the landlord's interest.

Facts

In appeals against two decisions of a leasehold valuation tribunal regarding leasehold enfranchisement valuation, the Lands Tribunal had to determine the preliminary issue of whether hope value could be included as an element in the value of the landlord's interest.

The value of a landlord's interest on any leasehold enfranchisement valuation depended on the value of his right to receive ground rent, the value of vacant possession at term and, potentially, hope value, which was based on the possibility of a freeholder selling the freehold or a lease extension to a tenant and thus realising his share of the marriage value.

The tenant in the second appeal submitted that it would be double-counting to include hope value in a valuation under the Leasehold Reform Act 1967 s.9(1A). The landlord, however, contended that marriage value did not include hope value because the latter was part of the value of the freehold interest before marriage value was calculated.

Held

Hope value could not, as a matter of law, be included as an element in the valuation of the landlord's interest. However, that was not because its inclusion would result in double-counting, but because it was more likely that s.9(1D), in providing that the tenant's share of the marriage value should be a half, was referring to a marriage value derived from a valuation of the freehold and leasehold interests that entirely left out of account the prospect of their coalescence. The statute provided for a 50-50 split, which suggested that, since there was no established valuation practice in relation to hope value, it envisaged a marriage value derived without regard to hope value.

Preliminary issue determined