Partner Katja Wigham, in our Commercial Property team, highlights a pending Court of Appeal decision that could see the cost of extending leases or buying a freehold fall.
On 14 January 2018, the Guardian published an article on the case of Mundy v The Sloane Stanley Estate, which will be going to appeal this week. The outcome of the case could have a significant impact on the cost of extending leases or buying freeholds of households in England and Wales.
The article goes on to say that there are estimated to be 2.1m homes in England and Wales where the leases have less than 80 years remaining, with 490,000 homes in London alone. The suggestion is that, depending on the outcome of the case, the cost of extending such leases could drop by an average of 31%.
The case is challenging the “relativity graphs” that are used by property experts to set the value of short leases relative to the freehold, which were created in 1996 and have remained unchallenged since then. The surveyor behind the case claims that the graphs overly favour landlords and that this is a much bigger scandal than the ground rents issue, which has been in the news recently.
Either way, the decision of the Court of Appeal will be interesting. Whatever the outcome, it is likely to be further appealed to the Supreme Court, so watch this space for further news.
Our award-winning Property team is experienced in advising clients in relation to lease extensions and buying the freehold of a property.
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This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.