Thu 25 Jan 2018
A landmark Court of Appeal ruling that could be critical in determining the value of over two million homes in England and Wales with leases of under 80 years is a “devastating outcome” for leaseholders.
That was the view of leasehold enfranchisement specialist Leasehold Solutions, which was commenting on the case of Mundy vs the Sloane Stanley Estate.
The Court of Appeal ruled in favour of the trustees of the Sloane Stanley Estate, which owns numerous freeholds in London’s Chelsea.
It upholds a previous verdict by the Upper Tribunal (Lands Chamber) in May 2016.
Leaseholders claimed they have been over-paying by up to 50% for lease extensions and freeholds but Leasehold Solutions claimed the Court of Appeal’s verdict meant that leaseholders would now be forced to pay even more for lease extensions and freehold acquisitions.
The outcome means that an alternative relativity graph developed by James Wyatt of Parthenia Valuations, which would have lowered the costs for lease extensions where the remaining lease length has dropped below 80 years, cannot be used to calculate the value of a lease extension.
Louie Burns, managing director of Leasehold Solutions, said: “This verdict is an absolutely devastating outcome for leaseholders up and down the country, not just those living in prime central London. It is so disappointing to see that yet again the courts have backed the interests of wealthy freeholders.
“The court’s decision to uphold a lower relativity in leasehold valuations means that freeholders will receive even more money from leaseholders, as leaseholders will now be forced to pay more for their lease extensions – to the tune of many millions of pounds.
“The valuations model at the heart of this case estimates that leaseholders are currently being overcharged by £480m a year. Over the past two decades that’s a staggering £9.6bn that has been taken from householders due to flawed valuation methods that have favoured freeholders at the expense of leaseholders.
“The Government has recently said that it is willing to tackle unfair practices in the leasehold market, so it is extremely disappointing that the courts have yet again ruled in favour of wealthy freeholders and their lackeys, all of whom have a vested interest in maintaining the unjust status quo.”
Source: Property Industry Eye