The tenant’s lease had about twelve years unexpired and was at a rent of andpound;45 per annum. The valuation of the landlord’s reversionary freehold interest involved two stages. The first stage was to assess the so-called investment value of the landlord’s interest. This had two components. The first was the right to receive the rent over the remaining 12 years of the lease, which involved capitalising that future rental stream. The second component was the value of the landlord’s deferred right to possession of the house at the end of the 12 years, which involved applying an appropriate annual deferment rate to the present value of the unencumbered freehold interest. The market value of the tenant’s interest was andpound;45,000, and the investment value of the landlord’s interest was andpound;84,257, while the value of what the tenant would end up owning, namely the unencumbered freehold interest, was andpound;187,500, which is andpound;58,243 more than the aggregate of those two figures. Accordingly, combining the two interests released a so-called marriage value of andpound;58,243.
Held: ‘Mr Hopper’s addition . . represents the actual amount which the lessee in friendly negotiations with the lessor would be willing to bid above the amount which any other purchaser would pay: that amount would take his bid well above that of any other potential purchaser. Mr Hopper assumed that the parties were of equal bargaining strengths. I agree: neither can unlock the marriage value without the other. In friendly negotiations they would agree to divide it equally as they had done in the 57 settlements [as between landlords and tenants of other houses where the tenant was seeking to enfranchise].’
Citations:
[1982] 1 EGLR 209
Statutes:
Jurisdiction:
England and Wales
Citing:
Applied – Norfolk v Trinity College, Cambridge 1-Apr-1976
The Tribunal considered, for the first time the effect of a marriage value in determining the price of the freehold reversion.
Held: The marriage value was to be divided equally between the freeholder and tenant applicant. . .
Cited by:
Cited – Earl Cadogan v Pitts and Wang; Similar HL 10-Dec-2008
The House considered the basis of valuation on an acquisition of the freehold reversion of a lease under the 1967 Act of the three elements, the rent, vacant possession after the lease, and the marriage or hope value of the two interests when . .
Lists of cited by and citing cases may be incomplete.
Landlord and Tenant
Updated: 07 May 2022; Ref: scu.278769