In a landmark leasehold reform case, the Court of Appeal has rejected the tenants’ grounds for appeal and ruled in favour of the freeholder on the matter of lease extension costs.
In the case of Mundy v the Sloane Stanley Estate, the lease on a small property in Chelsea had fewer than 23 years remaining and the freeholder sought £420,000 for the lease extension.
Leaseholders had been hoping that the Court of Appeal would endorse a method of calculating the short lease value that would reduce costs for tenants, but their grounds for appeal were rejected.
The decision therefore represents a victory for major freeholders such as the Sloane Stanley Estate, with the alternative valuation model proposed by campaigners reportedly ‘consigned to history’.
Simon Masters, Head of Leasehold Reform at CG Naylor LLP, explains the decision.
In spite of this result, surveyor James Wyatt of Parthenia Valuation maintains that parliament will now be called upon to overturn the decision. Only last month the Department for Communities and Local Government said it aimed to make leasehold reform easier and cheaper, while the valuation model proposed by Parthenia may yet be among those considered for future reform.
In the meantime, however, the best advice for leaseholders is to extend the lease before it falls below 80 years in order that unnecessary expense and complications may be avoided.