Trustees of the Sloane Stanley Estate v Charles Carey Morgan and John Matthew Stephenson
Decision date: 10 October 2011
Neutral citation: [2011] UKUT 415 (LC)
Overall AI summary confidence: medium
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: medium
This appeal concerned the premium payable on collective enfranchisement of Vale Court, focusing on relativity for very short leases, roof development potential, hope value for non-participating flats, deferment for reversions under five years, and disputed transfer covenants. The Tribunal set relativity for 4.74-year leases at 8%, allowed only a nominal £10,000 for speculative roof development, applied specified percentages of marriage value as "hope value" for non-participating flats, adjusted the deferment approach for very short reversions (net rental yield rounded to 3.25% plus a 5% end allowance), rejected the proposed transfer covenants, and allowed the appeal in part, fixing a revised premium of £2,961,613.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: medium
Where reversions are under five years the correct approach, as applied here, is to start from the freehold vacant possession value and discount the lost possession by applying the appropriate net rental yield for the property (rounded in this case to 3.25%), with an additional end allowance (5%) for lack of control, rather than importing long-term government-yield-based deferment formulas. Also, relativity for very short leases must be determined from valuation evidence in the case (here supporting an 8% relativity) rather than by uncritically adopting percentages from other tribunal decisions.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The decision contains comments that a purchaser of a short-term reversion would not treat future price movements differently from a purchaser of freehold in possession (so no separate short-term growth allowance is generally warranted), and that planning-opportunity valuations require factual support from planning history and permissions—expert opinion alone may be insufficient to establish a realistic development prospect.