Accurate valuation of interest in shared property

Client is joint owner of property overseas, ex still lives there and does not want to leave, it can’t be disregarded, unless client takes steps to sell.

We have appealed the pension service’s initial valuation which was derived by splitting an estimated sale price down the middle less 10%, and so they came up with a somewhat lower valuation. This new value gives tariff income just small enough for PC to come in payment.

However, we had a punt at appealing again, citing R(IS)5/07 and arguing that the value of “half a house” may be estimated by the tribunal to be less than the capital limit, especially where there is likely to be considerable legal difficulties in realising its worth overseas. We now see from the bundle that their new value is in fact based on a report by a RICS Registered Valuer, who has:-
- taken a local overall valuation supplied by our client
- halved and knocked off 10%
- adjusted it for a presumed drift in prices between the time of valuation and decision
- knocked off 30% to represent difficulties in sale.
This RICS report is prefaced by a statement that it is not suitable to be relied on in a court hearing, as the valuer has not inspected the property and has no local knowledge. The DM argues that credence should still be given to the report, which is by a senior surveyor and takes account of the circs in this case, so R(IS)5/07 doesn’t apply. They also say that under the foreign law there is a (lengthy) mechanism for forcing sale through the courts.

Is the tribunal unlikely to disagree with the surveyor’s report, given it is “not suitable to be relied on in a court hearing”, but is nevertheless the best available? Are there are particular arguments that might be advanced about the feasibility of someone on means-tested benefits taking on a multi-year court case overseas, apart from common sense ones?

I have a similar case and the tribunal hearing is next week. The ex-husband does not live there, but bought the one bedroomed property for his sole use, and is most definitely an unwilling seller.

I think there is a real risk that the tribunal will accept the valuation by the Valuation Office Agency. However, I did have a case of shared property in Bulgaria where the tribunal accepted that the value of the shared property was significantly lower than the valuation given by the DWP. In that case no evidence was obtained from the Valuation Office Agency, but my submission was that a 50% share in a property worth about £38,000, in a poor selling market, was worth less than half of the theorectical £19,000 half share.

This case is for a property in Spain, and the evidence from DVS (District Valuer Services, which is part of the Valuation Office Agency), suggests reducing the mathematical half share by 30% to reflect the facts that the other owner is an unwilling seller. It is stated that the amount of discount is “entirely speculative”.

The letter includes an extract of advice given to the Benefits Agency (as it was then ) in 1999 about Spanish property. If your case is about Spanish property, and your evidence does not include this advice, I will fax it to you as it is very useful. It talks of the long legal process to force a sale (taking 2 years or so); the order for sale being at auction, with no reserve on the third auction (and that Spanish speculators usually wait for the third auction; it describes there being “no ready market” for the sale of a half share but says nevertheless that this should not be taken to mean that no one could be found to buy at a sufficiently discounted price.

Overall, as it is likely to be a speculator who might buy the share, with the prospect of 2 years of legal red tape and expense before a sale is ordered, then the uncertaintly of auction sales (with the likeliest sale on a third aution without reserve), I think a discount of 30% is ridiculously low.

If your case is similar, it is certainly worth pointing out just how unattractive the half share would be as an investment, and therefore how little weight should be placed on the suggested discount (and thereby valuation of the share). Ask yourself, would you think that the cost of the share suggested represents an investment that a reasonably sane person would wish to take? It may be that there is little market there for the sale of properties in the whole, which would stregthen your case even more.

Thanks sovietleader. I was rather vague in my first post, but it sounds like my bundle has a similar DVS report (“entirely speculative”), and also the Benefit Agency’s info on Spanish property.

I’d be interested to know the outcome of your case (we are at the TAS1 stage). If you have anything that could be helpful, I’d be very grateful. If it can’t be posted here, our fax is 01756 796631 or email: bureau at skiptoncab.cabnet.org.uk

On the offchance case law is helpful…

Property valuations must be made in accordance with the law of the country in which the property is situated.  The following may or may not assist (I haven’t checked for context):

CH/4972/2002
Chichester DC v LB & SoS DWP [2009] UKUT 34 (AAC) (aka CH/0426/2008)
MB v RB Kensington & Chelsea (HB) [2011] UKUT 321 (AAC) (aka CH/0199/2011)
Martin v SoS DWP [2009] EWCA Civ 1289 (reported as [2010] AACR 9 - also see CIS/0213/2004 - interim AND final versions)

In addition, methods of valuation have been at issue in the following (again, context not checked):

CH/3713/2006 (heard with CH/3714/2006)
[2008] UKUT 9 (AAC) (aka CH/2367/2008)
CH/0016/2010
R(JSA) 1/02
R(IS)  3/96

Thanks Kevin, there are some relevant cases there. In my original appeal I quoted R(IS)5/07:
...  If there is no expert or other specific evidence, then the tribunal must make an informed guess to the best of its judgment on the evidence it does have. It may note the robust view taken by the deputy Commissioner in R(JSA) 1/02 in deciding that appeal himself. The tribunal will be aware that the critical figures are the maximum and minimum capital figures for income support claim purposes.

The DM has rejected that, as they do have a professional opinion of value. I can try citing R(JSA) 1/02:
It is not enough for the tribunal to accept the opinion of a valuer as to the value of an interest in property, even where the valuer is shown to be an expert, without some reasons being given for adopting the value put forward.
[...]
The Commissioner in CIS/191/1994 pointed out that where the home is of modest value, and none of that value could be realised by a claimant or any person acquiring his interest for a lengthy, and possibly unascertainable period, it is unlikely that anybody would be prepared to pay very much for the interest, and it may have little or no value.

And, in R(IS)3/96, a valuer’s opinion was also rejected, citing the following case:
In paragraph 54 of CIS/391/1992, the tribunal of Commissioners said:
“The valuer should be instructed to express a view as to whether there was on the facts of this case, any market, as at 15 March 1991 or later up to the date of his advice, for the hypothetical share. If advised that there was he should indicate where he says the market lay and why. If he attributes a value to the share he should indicate how that value has been calculated. He should state whether he has any experience, or knowledge of the sale of an undivided share in these circumstances. Valuations of market value are usually based on comparables. With houses, one looks to see the prices that similar houses are fetching. The valuer should indicate the comparable on which he has relied. If there are none, he should explain how he has arrived at his valuation”

However, I really need to come up with a positive argument why they should adopt a different value, especially as this is a first claim, so if there is any burden of proof it will lie with us. In CH/2367/2008 where there was a higher valuation available, there was criticism of: the failure of the tribunal to identify the evidence on which the tribunal decided Mr S’s property “could be almost valueless” throughout the period relevant to its decision.

I can cite the generic and speculative nature of the valuer’s opinion, and assert that 30% is not sufficient deduction to reflect the probable true value in all the circumstances. I think I also have a separate argument that the claimant’s lack of means will make overseas court action impracticable, and so any value could not in fact be realised. My understanding is that the 30% deduction already allowed doesn’t in any way factor in this particular claimant’s legal and financial difficulties in getting property on the market, it’s just their stab at what the share would fetch at auction.

(I am writing all this out in the hopes that any obvious flaws will be pointed out .. )