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Thursday, January 25, 2018

Landmark leasehold case fails to cut extension costs

Mark Chick, ALEP Director and Partner, Bishop & Sewell LLP comments:

"The Association of Leasehold Enfranchisement Practitioners (ALEP) has been eagerly awaiting the outcome in the Appeal of the so-called ‘Mundy’ case, (Mundy v. the Trustees of the Sloane Stanley Estate).

The Court of Appeal has dismissed the appeal made by tenants in this case. The applicants were seeking to argue for a radically different way of calculating relativity, following on from their unsuccessful attempt to encourage the Upper Tribunal to do so in the original decision of that tribunal.

This decision has been much anticipated and there has been a lot of recent comment, suggesting that if the Court of Appeal had sent this case back to the Upper Tribunal that this may have been very good news for leaseholders as there may have been scope to see the tribunals adopting a view of relativity that would have reduced the cost of lease extensions and freehold purchases where leases are under 80 years and marriage value applies.

What is clear is that the decision confirms that the position of leaseholders whose leases are about to fall under 80 years, or have already done so, remains one where action is required. One crucial message that ALEP has striven to get across during its 10 year history, that leaseholders should not let the length of their lease fall below this mark, so the value of the property is protected.

We would therefore encourage anyone in need of professional advice to make contact with ALEP to locate a member who can help them through the complexities of extending their lease or buying the freehold.

Awareness of leasehold is at an all-time high, and today's ruling will further highlight the issue.

"he outcome will no doubt be seen as a blow to those who have been campaigning to see changes in the leasehold system and we cannot ignore the growing ground swell of consumer and political opinion that is now seeking changes to the leasehold system.

However, what is important to note is that, notwithstanding the outcome of the ruling from the Court of Appeal, the government has in the outcome of the recent consultation on ‘Tackling Unfair Practices in the Leasehold Sector’ and other recent announcements indicated that it wants to look at many things, including making it easier for flat owners to enfranchise and also to ‘simplify’ the valuation process. Indeed, the Law Commission is going to be asked to look at this as part of the proposals from government."

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