40 Chelsea Square - Knight Frank

lease extensions, which was the basis upon which the agreed deferment rate on the Brompton
Estate was arrived at, than should be applied to the collective enfranchisement of 32 Rosary
Gardens. In our judgement, extra compensation under para 5 is directed to the diminution in
the landlord’s interest in other property and so would not compensate him for the diminution in
the value of the reversion on the relevant lease, for which the premium is to be assessed
without regard to the possibility or terms of any collective enfranchisement. Nevertheless, if
Schedule 13 does provide for less than complete compensation it must be so applied, and we do
not construe these provisions on the basis that such could not have been the intention of
Parliament.
161. We do not, however, think that Schedule 13 does require the assumption of a flying
freehold. We accept that para 3(2)(a) does have that effect. We accept however
Mr Gallagher’s submission that para 3(4) entitles the vendor to have it assumed that the
reversion upon the relevant lease was sold only together with the freehold interest in the rest of
the block. This sub-para provides that:-
“It is .. declared that the fact that sub-paragraph (2) requires assumptions to be made
as to the matters specified ..does not preclude the making of assumptions as to other
matters where those assumptions are appropriate for determining the amount which ..
any such interest of the landlord .. might be expected to realise if sold” [by a willing
seller in the open market].
162. Mr Waters relied on a number of practical advantages which accrue to tenants who
purchase the freehold of a block of flats, identified in Maryland Estates Limited v Abbathure
Flat Management Co Limited (1999) 06 EG 177. He however accepted in answer to the
Tribunal that, even if there were such advantages, they were not to be considered in the
assessment of the payment to be made on collective enfranchisement under paras 2(1) and 3 of
Schedule 6 to the 1993 Act because the bid of anyone within para 3(1A) of the Schedule is
excluded from the hypothetical sale.
163. For these reasons we do not think it necessary to assume a different risk factor in respect
of the reversion upon a single flat as opposed to a block of flats. In the circumstances of these
cases therefore there is no statutory assumption requiring a differential deferment rate as
between one exercise of rights or another.
(b) Physical differences
164. Any difference in the deferment rate between houses and flats of the quality with which
we are dealing on the Cadogan Estate, is, therefore, limited to such as may be judged
appropriate having regard to the lesser management problems of a single house and the
possibility that there may be a better prospect of growth in the house as opposed to the flat
market (see para 130 above). We conclude that, for these reasons, there should be a ¼% of
differential between houses and flats increasing the basic deferment rate for the latter to 4¾%.
38