Case No. UKUT-152-(LC)-UTLC-Case-Number:-LC-2021-240

Total £700 per annum238.Mr Cottage valued the alternative use as nil on the basis of the restriction in the intermediate lease, which we discussed above. In step 2 he adopted the £600 per annum from the Dale Park decision which related to the right to keep a mast, retain an electricity supply and the provision of a rolling break clause. For step 3 the figure of £100 per annum reflected the administration costs the respondent would incur if it properly mitigated its costs, there being no material requirement for it to become involved in providing access. 239.Following the publication of the Affinity Water decision Mr Cottage revised his approach to Step 3. He noted that in that decision the experts agreed a sum of £1,500 per annum to take account of the burdens on the site provider as a result of having to provide access to a site within a secure compound. He maintained his figure of £100 per annum if access remained unrestricted. If under the terms of the lease the landlord monitored access to the site, he assessed that cost to the site provider at £500 per annum, yielding a revised figure of £1,100 per annum. He said that he would reduce that to £1,050 if there were a break clause exercisable annually after five years rather than a rolling break.240.Mr Williams on the other hand, adopted a different three-stage approach. He had undertaken a detailed analysis of comparable transactional evidence from which he concluded that it would be appropriate to use the annual equivalent of a one-off payment for disturbance of £4,000 and an early access/completion payment of £10,500. Spread over 15 years at 5% the annual equivalent amounted to £1,400 per annum. 241.Next Mr Williams added £1,000 representing the annual payment using stages 1-3 of Hanover and assuming a nominal alternative use value. However, he took the view that Audley House had a more valuable alternative use as car parking; 4 spaces at £550 per annum yielded an additional value of £2,200 per annum. The total rent was therefore £4,600 per annum. He undertook a final check by considering the Affinity Water table and observed that without the alternative use value the resultant £2,450 per annum would compare reasonably with the sites in the table.Port Talbot and Huntingdon242.As to Port Talbot and Huntingdon, the experts produced only their initial reports and did not re-examine their valuation after the Affinity Water decision in a supplemental report as they had done for Audley House. Mr Cottage again adopted the Hanover approach. At Port Talbot his stage 1 value was based on open storage at £4.00 per m2, yielding £373 which he adjusted to £500 per annum on the basis that most of the storage comparables were larger sites. He valued Huntingdon at £7.50 per m2 , which he again adjusted in light of the size of the site from £422 per annum to £600 per annum.243.Mr Cottage valued the stage 2 benefits at £150 and £250 per annum respectively; he saw no reason why a tenant would pay more under the second stage to use the access portal to gain access to the site, describing it as ‘an unwelcome layer of administration and bureaucracy'.244.The stage 3 burdens were quantified at £750 per annum for both sites to reflect the cost to the landlord of managing site access. Mr Cottage attributed no value to unrestricted rights to share, occasional use of a generator or loss of amenity caused by the mast.245.Finally Mr Cottage said that the rent should be increased by 5%, with a minimum of £100 per annum, to reflect the value to the tenant of a rolling break clause.246.Mr Williams also adopted the Hanover approach, arriving at stage 1 values of £1,500 and £1,000 per annum for Port Talbot and Huntingdon respectively based on storage values in the locality of each site. At stage 2 and in common with Mr Cottage his starting point was the £600 per annum that the Tribunal found appropriate in Dale Park. However, the approaches diverged from that point. Mr Williams perceived the respondent’s access portal to offer significant benefits to the claimant in the avoidance of conflict, abortive costs and deterioration of any existing relationship. He thought that On Tower would make 20 to 30 visits to the site over the course of a year and that £50 per visit was a reasonable sum to adopt to cover the cost of the service provided to the tenant; assuming therefore 25 visits he arrived at an annual sum of £1,250.247.Turning to stage 3 Mr Williams took Dale Park as his starting point for assessing the impact of the burdens on the landlord. Under this heading he included wear and tear on the access, deployment, refueling and recovery of a generator, and the degree of co-ordination, planning and management required for upgrades. Mr Williams was mindful of the decision in London and Quadrant where a stage 3 sum of £2,500 represented the burden of management over restricted areas together with unrestricted upgrades and sharing; he concluded that the burden of such activities would be less at ground rather than roof level and so adopted a figure of £1,500 per annum for both sites.The agreed consideration248.By the date of the hearing the position of the two experts was as follows:249.At the hearing the Tribunal encouraged the experts to reconsider their use of consensual code lettings and of the Hanover approach in light of its comments in Affinity Water, and to explore the possibility of agreeing values. They did so, and on the third day of the hearing returned to the Tribunal having agreed the following alternative positions depending on whether or not the Tribunal was going to require On Tower to use APW’s access portal but in either case assuming that access would be available 24 hours a day, 7 days a week.250.At this point in the hearing of course the Tribunal had not made the determination set out above (at paragraph 233) about the alternative use value for Audley House; it was agreed that it was either nil, or £2,200 on the basis of four parking spaces. 251.In addition, the experts agreed that if the leases should contain a tenant’s break after 5 years (on 12 months’ notice) the consideration would be adjusted upwards by 5% subject to a minimum of £100 per annum. 252.The surprise in the above figures was the agreement that the imposition upon On Tower of a requirement to use the Access Portal would lead to a reduction in rent, despite APW’s position up to that point that it was a valuable benefit to the tenant. We asked Mr Clark and Mr Seitler QC if their clients accepted and stood by the figures agreed by the valuers and they said they did. 253.The experts were nevertheless cross-examined briefly about adjustments that might be made in light of the various terms that remained undetermined; in the event we do not need to say anything about that. Mr Cottage confirmed that in reaching the agreed sums he had had regard to the Hanover methodology. He said that in coming to a figure of £1,300 per annum for Audley House, the Step 2 value was £600 and Step 3 was £700. As far as Port Talbot and Huntingdon were concerned, the alternative use was £800 in both cases and the remaining value covered both Steps 2 and 3. He did not break down the figures any further. Mr Williams did not offer any additional insight in to how the values had been arrived at. 254.The consideration for the three sites is agreed. The deduction for use of the Access Portal is not relevant; and we make no addition for the break clause since it was agreed to be exercisable after seven years rather than five and because a landlord’s break clause is also to be included.255.Accordingly the annual consideration for Audley House is £3,500, for Port Talbot £2,050 and for Huntingdon £2,100.Further observations256.These figures cannot be added to the Affinity Water table because they are agreed rather than having been determined by the Tribunal. Nevertheless, as Mr Cottage’s explanation indicates, they were arrived at by the same methodology as were the figures in the table, namely through the Hanover three-stage approach, and they may therefore be helpful to parties in future negotiations since (once the value of the alternative use for Audley House is taken out) they are consistent with the figures in the table. 257.As we said above, we do not believe that either the parties or the Tribunal will be assisted in future by evidence of consensual transactions for use as comparables, nor by argument about the small sums that might feature in a Hanover calculation. In most cases the table will remain a good indication of the level of consideration which would be agreed in the open market for sites with comparable characteristics let on the paragraph 24 assumptions, and it will not be difficult – as the valuers in these references eventually found – to fit new types of sites into that scale. To be blunt, it should be obvious that a ground level site in a car park or a haulage yard is going to command a higher rent than a rural site but less than a rooftop site or the top of a water tower. Valuation evidence, if it is needed at all in future references, ought to become a great deal simpler in light of the guidance that the Tribunal has now given.