The Court of Appeal has today (24/1/18) ruled against Mundy in the long-running case regarding leasehold extensions.
The case challenged the current system of leasehold valuation, contesting the way in the value of short leases relative to the freehold are calculated. At present, this is based on “relativity graphs”.
As well as refusing leave to appeal, the unanimous judgement awarded costs against Mundy, arriving at a decision which concluded that the proposed Parthenia model should not be put forward in future cases.
This model was put forward by Chartered Surveyor James Wyatt, who believes that freeholders may have been padding the cost of leasehold extensions by up to 50%.
However, despite dismissing the appeal, the ruling does question the current calculation process, backing the argument for a new method which is enshrined in legislation. Statutorily imposed formulas of this kind are already in place in both Scotland and Northern Ireland.
The second reading of the Bill which would bring in powers reflective of those in other parts of the UK is due to have its second parliamentary reading in February. As summarised by Lord Justice Lewison, “it may be, therefore, that the holy grail will one day be found.”
Expressing his disappointment with the decision was Louie Burns. The Managing Director of Leasehold Solutions stated:
“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 £480 million a year. Over the past two decades that’s a staggering £9.6 billion that has been taken from householders due to flawed valuation methods that have favoured freeholders at the expense of leaseholders.
“Leasehold Solutions has been campaigning for reforms to the leasehold system for the past 15 years, and addressing the inherent failures of existing methods of valuation – which have always favoured the interests of freeholders – has been one of our key arguments. Unfortunately the financial power wielded by freeholders presents a significant barrier to meaningful reform.
“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.”
The judgement can be accessed here.
One Response
So terribly disappointing the courts have come down against leaseholders. My freeholder has pitched his price high knowing I will have to pay his (along with my own) legal costs to challenge him. By the time I have paid the legal costs to challenge him I may as well pay the fee he wants. It’s outrageous. At the very least remove this devious aspect. I just want a way of calculating a fair price that is not contestable for either of us. The trouble is the legal profession has it’s finger in the pie as well!