Enfranchisement Cost
Determining the Price
In a case where the parties cannot agree on the price for the fee simple, it is determined by arbitration.
In residential cases, the Land Registry Ground Rent section carries out the arbitration.
In non-residential cases, the determination is made by the County Registrar. He conducts the arbitration. He may request the Valuation Office, to give a valuation or estimate of the purchase price of the fee simple.
Statutory Criteria
The County Registrar must determine the price, on the basis of criteria set out in the legislation. This provides for a price that a willing purchaser would give a willing seller.
The purchase price for the fee simple is the capitalised value of the rent, based on the current interest on Government securities where the land is used for business.
If not so used, or exceeds an acre and area, the following are relevant
- the area and nature of the land, its location and use
- the price paid for the fee simple or other interests in sales since 1964
- the interest of mortgagees
- costs and expenses incurred by the lessor, and superior owners in investing the purchase money
- costs and expenses incurred by the lessee by reason of the failure of the lessor to maintain the amenities required.
- the current price of the intermittent with lessor interest
- such other matters as are relevant to determining the purchase price.
Non-Business
In the case of the premises not used for business purposes but at least 15 years left to run and not exceeding an acre, the price is not to exceed the capitalised value of the rent at the rates based on government security yields last issue.
Where there is not 15 years left to run, or the rent is reviewed in 15 years, the maximum price is increased for each year by which the unexpired term is less than 15 years by 1/15th of the difference between the maximum price that otherwise would apply and the price based on current reversionary rents.
Determination by Arbitration.
The following applies to the determination of the purchase price of the fee simple or any other interest by arbitration by the County Registrar and arbitration conducted by the Registrar of Titles.
The purchase price shall be the sum which, in the opinion of the arbitrator, a willing purchaser would give and a willing vendor would accept for the fee simple or other interest at the relevant date having had regard to—
- the rent payable for the land by the person acquiring the fee simple,
- where, at the relevant date, the land is held under a lease which provides for an increased rent payable within fifteen years after that date, the amount of that increase and the time when it becomes payable,
- the current interest yields on securities of the Government issued for subscription in the State,
- if the land is used for the purposes of a business, or exceeds one acre in area and is not used for the purposes of business, the area and nature of the land, its location and user and the state of repair of any buildings or structures thereon,
- the price paid for the fee simple or any other interest in the land on a sale
- any mortgage or other charge on the interest in the land of any person from whom, mediately or immediately, the person acquiring the fee simple holds the land,
- the costs and expenses which, in the opinion of the arbitrator, would be reasonably incurred by the persons from whom, mediately or immediately, the person acquiring the fee simple holds the land, in investing the purchase money payable in respect of the acquisition of the fee simple,
- the costs and expenses which, in the opinion of the arbitrator, have been incurred by a person acquiring the fee simple who holds the land under a lease by reason of the failure of the lessor to maintain any amenities which he is required to maintain under a covenant in the lease,
- the current price of the immediate lessor’s interest in land held under leases or yearly tenancies similar to the lease or yearly tenancy, as the case may be, under which the land is held by the person acquiring the fee simple, and
- such other matters as are, in the opinion of the arbitrator, relevant to the determination of the purchase price.
Expired or Subject to Review
Where, at the relevant date, the land is held under a lease that has expired or is held at a rent which is subject to a review which is due but has not been made, the purchase price of the fee simple shall be a sum equal to one-eighth of the amount which, at that date, a willing purchaser would give and a willing vendor would accept for the land in fee simple.
It is to be assumed free of all estates, interests and incumbrances, but having regard to any covenant which continues in force and assuming that the lessee has complied with any other covenants or conditions in his lease that could affect the price.
A deduction is made from that amount equal to the value of the goodwill, if any, in the premises of the person acquiring the fee simple.
Cap I
If the land—
- is not used for the purposes of business,
- is held by the person acquiring the fee simple under a contract of yearly tenancy, or under a yearly tenancy arising by operation of law or by inference on the expiration of a lease or under a lease which will not expire within fifteen years after the relevant date, and
- does not exceed one acre in area,
then, subject to the below, the purchase price shall not exceed the amount which, if invested on the date of the award in the security of the Government which was issued last before that date for subscription in the State and is redeemable not less than fifteen years after the date of issue, would produce annually in gross interest an amount equal to the amount of the rent payable under the lease or yearly tenancy, as the case may be, during the year immediately preceding the relevant date.
The above (government bond yield basis) does not apply to a case where, whether under the lease or by virtue of the operation of a statute, an increased rent is or may become payable, or the rent is subject to review, within fifteen years after the relevant date.
Cap II
If the land—
- is not used for the purposes of business,
- is held by the person acquiring the fee simple under a lease, and
- the lease will expire within fifteen years after the relevant date, or the rent is subject to review within that period, under the lease or by virtue of any statute, and
- does not exceed one acre in area,
the purchase price shall not exceed the amount which would be determined (government bond yield basis) if the land were land to which that provision applies, together with, in respect of each year by which the unexpired term (reckoned from that date) of the lease falls short of fifteen years, one-fifteenth of the difference between that price and the price that would be determined under (one eighth etc. basis) if the lease had expired.
Where the land is held under a lease that will expire within fifteen years after that date or where the rent is subject to review within that time under the lease or by virtue of any statute, then—
- the length of time to run from that date to the expiration of the lease or to the earliest date from which the rent as so reviewed may become payable, as the case may be, and
- the provisions as to the price that would apply if, as the case may be, the lease had already expired or the review of rent were already due,
shall be among the matters to which the arbitrator shall have regard in determining the purchase price.