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Industry News January 18, 2018

Landmark Legal Challenge

The high-profile case of Mundy v Sloane Stanley Estate could benefit 2m households across England and Wales, if ruled in Mundy’s favour. The battle focuses on how the cost of lease extensions are calculated. If the challenge succeeds, the current price of buying or extending a leasehold could be cut by half.

According to a report by the Guardian there are estimated to be 2.1m homes in England and Wales where the leases have less than 80 years remaining, with 490,000 in London alone. The cost of extending the leases back to 99 or 125 years could fall by an average of 31%. 

Here we look at the Guardian report in more detail:

The case involves a small flat in Chelsea where the lease has fallen to under 23 years, and where the freeholder is seeking £420,000 to agree an extension.

Behind the case is the surveyor James Wyatt, who is challenging a system of lease valuation commissioned on behalf of the Duke of Westminster more than 20 years ago. He argues that the mathematical models currently in use wrongly award too much to the freeholder. 

“The big London estates will be particularly hit, but it’s not just about the London market. I hear from lots of people, many of them pensioners, who are trapped in declining leases and can’t afford to extend them. For example, I know one where the lease extension should be £30,000 but the freeholders want £50,000 and the pensioners can’t afford it,” he said.

Wyatt estimates that leaseholders are currently being overcharged by £480m a year but claims that a “gravy train” of surveyors and solicitors are earning huge fees maintaining the existing system. The legal challenge pitches Wyatt against some of the most powerful property interests in Britain. 

Jo Darbyshire, of the National Leasehold Campaign, said: “The Mundy case is a landmark moment in leasehold reform. If the appeal is successful all leaseholders will benefit by being able to pay less for lease extensions and freehold purchases.

“Over the last 12 months the National Leasehold Campaign has been pushing for reform to leasehold law and an end to the leasehold scandal. It’s time to see if the establishment are ready to listen to a logical, balanced argument and level the playing field for leaseholders.”

Read the full article HERE

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