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Landmark leasehold cases fails at Court of Appeal

Rob Cooke, property litigation partner at Lupton Fawcett in Leeds.
Rob Cooke, property litigation partner at Lupton Fawcett in Leeds.

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Nearly one in five of all properties in England are leasehold properties with the main hotspots being North East, Bristol and London.

The reason why the North East has so many leasehold properties is not only because of the amount of city centre flats, but because developers predominantly sold new build houses with leasehold titles only and sold the freehold titles on to investment companies.

A challenge to the established formula of valuing the cost of extending residential leases was determined by the Royal Courts of Justice in late January. The case of Sloane Stanley Estate v Mundy concerned a flat in Chelsea where the freeholder sought £420,000 to agree to a lease extension.

The appeal challenged the formula upon which the lease extension is calculated. Judgment was given on January 24, 2018 and ruled in favour of the freeholder. Had the appeal gone in favour of the leaseholder, this case would have had a massive impact on the costs of extending leases and acquiring freehold titles all over the country.

The costly and time consuming nature of both procedures have been noted and, in December 2017, the Department for Communities and Local Government said it would be “working with the Law Commission to make the process of purchasing a freehold or extending a lease much easier, faster and cheaper”. Clearly, the Court of Appeal in the Stanley Estate case was not prepared to assist in this process.

Currently, there are two ways in which you can acquire your freehold title or extend your lease; enter a voluntary agreement with your freeholder or serve them with a statutory notice.

In terms of the latter, for both lease extension and freehold acquisitions, you must have owned the leasehold title for a minimum of two years and the lease term should have been originally granted for a term of at least 21 years. The statutory notice involves following the strict procedure set out by statute and we would always advise instructing a member of our team to guide you through this technical process.

One area that has been in the news over the past year is the criticism of onerous ground rents set by developers. One major housebuilder, Taylor Wimpey, has noted this and introduced a scheme to help those who originally purchased Taylor Wimpey leasehold properties with leases with a 10-year doubling ground rent clause. Taylor Wimpey has reached agreements with numerous freeholders which includes a Deed of Variation which prevents the ground rent from doubling every 10 years and covering the costs of the leaseholder up to £750. Let’s hope other major housebuilders follow suit.

Lupton Fawcett LLP has a specialised team who offer a no-obligation initial consultation to advise you on extending your lease, acquiring your freehold or using the Taylor Wimpey assistance scheme. Our team has a wealth of experience in this area of law and operate on a fixed-fee basis.

Contact a member of our team today to find out more on 0114 228 3283 or natasha.wright@luptonfawcett.law