(1) Dolos Polydorou (2) Soteres Polydorou (in the capacity of personal representatives of Antonios Polydorou, deceased) v Management Nominees (Reversions) Limited
Decision date: 23 July 2010
Neutral citation: [2010] UKUT 236 (LC)
Overall AI summary confidence: high
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: high
This appeal concerned valuation for leasehold enfranchisement of 7 Brechin Place used as a student hostel/bed-sits, with issues as to planning status, appropriate comparables, deferment rate and the timing of two £50,000 deductions. The Tribunal held the upper parts were a residential hostel (not an ordinary C3 flat use), accepted the lessees' HMO/hostel comparables and evidence of hope value, increased the deferment risk premium to reach a 5.5% deferment rate, and treated both £50,000 deductions as items to be deducted from the freehold value before deferment. The enfranchisement price was fixed at £606,861; the lessees' appeal was allowed and the freeholder's dismissed.
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: high
Where a deduction represents a cost or adjustment that will affect the reversionary freehold interest (for example the cost or effect of discharging or accommodating a restrictive covenant or the impact of a statutory tenancy on the reversion), it is appropriate to reflect that deduction in the valuation of the freehold reversion before applying the deferment rate. Also, when valuing a reversion subject to restricted planning use, local market comparables in the same use category that embody any realistic hope value are preferable to a single nearby sale in a different planning use unless robust analysis (e.g. of swap economics) justifies the latter.
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 Tribunal observed that a hypothetical purchaser's assessment of covenant enforcement risk may be influenced by historical acquiescence by the covenantee, affecting the timing and quantum of any buy-out; and that valuers should analyse and quantify the economics of land‑use swaps where proposed C3 uplift depends on such swaps rather than assuming uplift without detailed analysis.