Summary

A tenant was required to put up a realistic figure as the premium he proposed to pay for a new lease under s.4(3)(c) Leasehold Reform Housing and Urban Development Act 1993.

Facts

Application for a declaration that a s.42 notice served under the Leasehold Reform Housing and Urban Development Act 1993 was invalid as not complying with s.42(3) of the Act. Proceedings were brought against Mr Barnier ('T1') who was the tenant of a flat in Rossetti House of which the Landlord ('L') was the freehold owner. On 31 May 2001 T1 served a s.42 notice specifying £100,000 as the premium he proposed to pay for the grant of a new lease. A week prior to this T1 had contracted to sell the lease to a Mr Rosen, the purchaser of the underlease ('T2'). At the beginning of August L served a counter-notice challenging the validity of the notice on the grounds that the premium was not realistic, as it was not justified by valuation evidence. L's valuation of the premium payable was #287,000. T1 then had his lease assigned to T2 together with the benefit of the s.42 notice and T2 was substituted as the Defendant.

Held

(1) There was no requirement in the language of s.42(3)(c) for either the premium to be based on valuation evidence, or for the tenant to offer the final figure that he was be prepared to go to. However, s.42(3)(c) did require T to put up a realistic figure. (2) The court would obviously allow a fairly wide margin when looking at whether the premium specified by a tenant was realistic but found it difficult to hold that a proposal could be realistic if it was not justified by valuation evidence. (3) It did not follow that the tenant had to be in receipt of expert valuation advice, but if a tenant did propose a figure without that advice, he ran the risk of the landlord challenging the basis upon which the figure was arrived at. (4) On the facts of this particular case, the figure proposed was some 44% of what valuation evidence said the appropriate figure should be and this could not be characterised as realistic.

Application allowed.